Stock indexes drift lower as Europe fears loom

By MATTHEW CRAFT,AP Business Writer Updated at 2012-05-24 20:52:25 +0000


NEW YORK (AP) — The Dow Jones industrial average and other stock indexes drifted lower Thursday after a meeting of European leaders failed to deliver any new steps to ease the region's debt crisis.

The Dow dropped 54 points to 12,443 shortly before 3 p.m. Eastern. Fears that Europe's troubles could turn into a worldwide financial crisis has pushed the 30-stock average down nearly 6 percent this month, erasing most of its gains for the year.

U.S economic news offered little encouragement. Orders for long-lasting factory goods edged up in April, but a key category that tracks business investment spending fell for a second straight month. The number of people applying for unemployment benefits dipped last week.

"Uncertainty is playing a big part here," said Stephen Carl, head equity trader at the Williams Capital Group. The potential for bad news to roil markets is so high right now that many investors would prefer to sit it out, Carl said. "There's just so much uncertainty at the moment you don't know which way things are going to go."

Hewlett-Packard gained 2 percent, leading the Dow. The personal computer maker plans to purge 27,000 employees, nearly 8 percent of the company's payroll. H-P expects the layoffs, part of a turnaround program under CEO Meg Whitman, to save $3 billion or more.

European leaders wrapped up their latest summit Thursday with no new concrete steps to fix the continent's financial crisis, even as worries rise about a messy Greek exit from the euro currency union.

Markets in Europe recovered from a huge sell-off the day before. Germany's DAX rose 0.5 percent and the CAC-40 in France 1.2 percent.

In U.S. trading, the Standard & Poor's 500 index slid seven points to 1,312. The Nasdaq composite index fell 30 points to 2,819.

Fears that Greece will drop the euro and set off a wider financial crisis have driven traders out of stocks and into the Treasury market this month. The surge in demand for Treasurys has knocked yields to all-time lows.

As a result, the U.S. federal government has been borrowing from bond markets at ever cheaper rates. The Treasury auctioned off seven-notes Thursday afternoon at 1.20 percent, the lowest rate on record.

Airline stocks jumped, led by a 9 percent gain in US Airways Group. Analysts at JPMorgan Chase expect a drop in jet-fuel prices over the past three months to lift airlines' profits. Southwest Airlines climbed 4 percent after the company said it plans to offer international flights from Houston's Hobby Airport. Delta Air Lines also rose 4 percent.

Among other stocks making big moves:

— Tiffany & Co. plunged 7 percent after the luxury retailer cut its 2012 sales forecast, citing slower spending growth in the U.S. and other countries.

— Data-storage company NetApp Inc. sank 13 percent. NetApp expects much weaker profit in the current quarter as a result of "increasing uncertainty" in the global economy.

— Pandora Media surged 14 percent after the online radio provider reported a smaller quarterly loss than analysts had expected. Ad sales and subscriptions soared over the year before. Pandora said it accounted for nearly 6 percent of all radio listening in the U.S.