MARKET SNAPSHOT: U.S. Stocks End Lower As Treasurys Fluctuate

By Anora Mahmudova and Carla Mozee, MarketWatch

Oil and gold prices rise as dollar weakens

U.S. stocks on Tuesday declined for a second straight session, though losses were modest after indexes recovered from a bout of selling linked to fluctuations in Treasury yields.

The S&P 500 (SPX) closed 6.21 points, or 0.3%, lower at 2,099.12, with eight of its 10 main sectors finishing lower. Energy stocks posted modest gains thanks to a jump in oil prices. The Dow Jones Industrial Average (DJI) dropped as much 141 points, but ended 36.94 points, or 0.2%, lower at 18,068.23. The Nasdaq Composite (RIXF) shed 17.38 points, or 0.4%, to 4,976.19.

U.S. bond prices recovered from an earlier bout of selling (http://www.marketwatch.com/story/treasurys-rebound-from-early-rout-2015-05-12) that followed a steep decline by European bonds. Yields rise as bond prices fall.

Some analysts have pointed to a rise in inflation expectations in the eurozone as a factor driving bond prices down and yields higher. The widely watched yield on Germany's 10-year bund (http://www.marketwatch.com/story/german-bond-yields-surge-amid-european-bond-sellof-2015-05-12) leapt to nearly 0.7% Tuesday, from about 0.62% Monday, though that level remains very low by historical standards.

Bruce Bittles, chief investment strategist at RW Baird & Co., said the stock market is stuck in a range.

"There are too many people who are in the stock market who should not be, and that is because of the Fed policies. At this point, we don't think the Fed will raise interest rates this year, and all the talk of rate hikes is aimed at knocking the stock prices down," Bittles said.

Bittles is watching the technical levels for clues about the direction of the market. "If the S&P 500 falls to 2,070, then we are looking for further selloffs. A fall below 2,040 would signal a correction," he said.

The yield on the 10-year Treasury note on Tuesday briefly climbed to the highest level (http://www.marketwatch.com/story/treasury-yields-rise-to-highest-level-since-nov-21-2015-05-12) since November, but reversed course and fell 2 basis points to 2.26% in late afternoon trade, according to Tradeweb.

AOL/Verizon: AOL (AOL) shares jumped 19% after the company agreed to be bought by Verizon (http://www.marketwatch.com/story/aols-stock-soars-after-agreeing-to-be-acquired-by-verizon-2015-05-12)(VZ) in a deal valued at $4.4 billion. Verizon expects to fund the purchase with cash on hand and commercial paper. Verizon's stock fell 0.4%.

Data: The National Federation of Independent Business said its small-business optimism index rose 1.7 points (http://www.marketwatch.com/story/small-business-optimism-rises-in-april-nfib-says-2015-05-12) to 96.9 in April, though the reading is still the second-worst since October.

March job openings declined to 4.99 million from February's 5.14 million.

San Francisco Fed President John Williams (http://www.marketwatch.com/story/feds-williams-wants-rate-hike-a-bit-earlier-2015-05-12) said Tuesday that he wants the U.S. central bank to start raising rates "a bit earlier" so that the path of rates can be gradual. This suggests that a rate hike in June isn't out of the question.

Stocks to watch: International Flavors & Fragrances Inc.(IFF) said first-quarter profit rose 20% (http://www.marketwatch.com/story/international-flavors-profit-rises-20-2015-05-12), despite the strong dollar's impact on sales. But shares fell 4.1%.

Gap Inc.(GPS) shares dropped 3.8% after the clothing retailer's first-quarter revenue missed analysts' estimates, as compiled by FactSet.

Pall Corporation(PLL) shares soared 19% after news reports that it is auctioning itself off to the highest bidder. Thermo Fisher Scientific (TMO) and Danaher (DHR) are said to be among the bidders.

Other markets:Oil futures (http://www.marketwatch.com/story/oil-prices-gain-in-volatile-trade-as-dollar-weakens-2015-05-12)(CLM5) shot higher and settled at the second-highest level of the year, rising 2.5% to $60.75 a barrel. Gold prices (http://www.marketwatch.com/story/gold-buoyed-as-global-bonds-drop-2015-05-12)(GCM5) rose to the highest level in a week, gaining 0.8% to $1,192.40 an ounce. Meanwhile, the U.S. dollar (DXY) fell.

In Europe, the Stoxx 600 tumbled 1.3%. Greece worries intensified after the country's finance minister said it may run out of cash in two weeks. In Asia, the Shanghai Composite fell 1.1%, but Japan's Nikkei Average edged up about 4 points.

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