NEW YORK (TheStreet) — U.S. stocks remained weak but were coming off session lows Wednesday afternoon amid ballooning fears of a Greek exit from the eurozone.
A warning from the Congressional Budget Office late Tuesday that the U.S. economy could fall into a recession if steep tax increases and scheduled government spending reductions go into effect in January was also contributing to the jitters. Tumultuous trading was seen across asset classes with bonds spiking higher, gold in heavy retreat, and the euro sinking to levels unseen in nearly two years. At last check, the Dow Jones Industrial Average was falling 135 points, or about 1.1%, at 12,368, bouncing more than 50 points off its low of 12311. The blue-chip index down more than 7% since hitting a 52-week high of 13,359 on May 1. The S&P 500 was down 12.5 points, or 1%, at 1304, and the Nasdaq was losing 23 points, or 0.8%, at 2,816.
Wal-Mart(WMT) was the only one of the 30 Dow components to trade in the positive territory. The largest percentage decliners were Hewlett-Packard(HPQ), Microsoft(MSFT), Intel(INTC), Chevron(CVX), and American Express(AXP). Hewlett-Packard was taking the biggest hit ahead of its quarterly report after the closing bell. The big miss and tepid guidance of rival Dell(DELL) after Tuesday’s closing bell was raising concerns about the performance of HP, which is expected to announce a restructuring plan that may include the elimination of as many as 30,000 jobs. Analysts expect HP to report fiscal second-quarter earnings of 91 cents a share on revenue of $29.92 billion. Dell shares were down nearly 18%, hitting a session low of $12.31, a level unseen in three years. Volume of more than 72 million was approaching five times the issue’s trailing three-month daily average churn. In the broader market, the number of losers outpaced winners by a nearly 3-to-1 ratio on the New York Stock Exchange and by more than a 2-to-1 ratio on the Nasdaq. The sectors being hit hardest were conglomerates, energy and financials. “I think in the markets there’s a slow realization that the outlook for growth and stable growth is not as good as it was even a week ago,” said Brian Gendreau, market strategist with Cetera Financial. Wall Street finished on a mixed note Tuesday as concerns about Greece’s potential exit from the eurozone resurfaced in the final hour of trading. Late in the day, former Greek Prime Minister Lucas Papademos was quoted as saying preparations were being made for Greece’s potential exit from the single-currency bloc. Also, a Reuters report on Wednesday said eurozone officials were telling members to prepare contingency plans on Monday. European leaders are meeting Wednesday at an informal dinner in Brussels — their 18th gathering there in the past two years — to discuss ways to soften austerity measures that are causing political turmoil in Greece and other weaker European nations. They are also discussing other controversial policies including the creation of eurozone bonds, which has been stiffly resisted by Germany.