U.S. Stocks Fall on Greece Worries

By Saumya Vaishampayan 

U.S. stocks extended their price declines on Wednesday, as recent optimism about a bailout deal for Greece faded.

The Dow Jones Industrial Average declined 160 points, or 0.9%, to 17984, trading near its low for the day. The S&P 500 index lost 14 points, or 0.7%, to 2110, and the Nasdaq Composite Index fell 37 points, or 0.7%, to 5123.

Declines were broad-based. All 10 S&P sectors were in negative territory, led by a 1.3% fall in materials stocks. Goldman Sachs Group Inc.'s shares fell 2.1%, contributing about 30 points to the Dow's overall decline.

European stocks slipped amid concerns about Greece. Germany's DAX lost 0.6% and France's CAC-40 fell 0.2%.

Remarks from European finance ministers suggested a Greek bailout deal isn't likely to be reached on Wednesday. Earlier, Greek Prime Minister Alexis Tsipras attacked the country's international creditors after they rejected a list of economic measures Greece said it was willing to undertake in exchange for financial aid.

"Recently, it's been Greece driving the market," said Larry Weiss, head of trading at brokerage firm Instinet. "We move around with the hope of a settlement or fear of an exit," he added.

Without an agreement before the end of the month, Greece is set to default on a June 30 payment to the International Monetary Fund, which would fuel concerns about the country's potential exit from the eurozone.

In recent days, the market has been driven by investors making passive bets on stocks, such as buying or selling through stock-index futures or exchange-traded funds, rather than buying individual shares, traders said. That tends to happen when investors are focusing on broad economic or political news, such as Greece's bailout negotiations.

"I'm more concerned about how this [Greek deal] gets structured," said Bob Landry, who manages about $165 million as an equity portfolio manager at USAA investments. "Anything that doesn't introduce a pro-growth type solution is destined to fail down the road," he said.

Wednesday's losses dragged the Dow industrials into negative territory for the month, down 0.1%. The S&P has added 0.2% and the Nasdaq Composite has advanced 1.1% in June so far.

Economic data also attracted attention. The U.S. slowdown in the first quarter was less severe than previously estimated, according to data released Wednesday. Gross domestic product contracted at a 0.2% annual rate in the first quarter, the Commerce Department said, versus a previously estimated 0.7% contraction. Economists surveyed by The Wall Street Journal had expected a 0.2% contraction.

Many stock investors say the pace of U.S. economic growth is critical for a pickup in corporate revenue and earnings. Corporate profits were soft in the first quarter, hamstrung by a strong dollar and lower oil prices.

"To have a surprisingly good earnings quarter is going to require revenue growth," said David Bahnsen, a managing director at HighTower in Newport Beach, Calif. "To have good revenue growth, you're probably going to need a stronger economic tailwind, meaning good GDP growth," he said.

In commodity markets, gold futures fell 0.2% to $1173.90 an ounce. Crude-oil futures lost 1.3% to $60.22 a barrel.

The yield on the 10-year Treasury note slipped to 2.370% from 2.409% on Tuesday. Yields fall as prices rise.

In corporate news, home builder Lennar Corp. said profit rose 33% in its latest quarter, beating expectations. Shares gained 4.4%.

Monsanto Co. reported earnings for its third quarter that topped analysts' expectations. The seed company said it expected fourth-quarter results to break even, while analysts most recently expected earnings of 31 cents. Shares fell 5.3%.

Netflix Inc. said it plans to split its stock 7-for-1, a move intended to make its shares more attractive to retail investors. Shares slipped 0.2%.

Write to Saumya Vaishampayan at [e-mail]

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