Stocks Hit By Greek Drama

FOSLNew York, May 8th ( – Stocks cut their losses, but still closed lower with the Dow logging its fifth consecutive decline. Political uncertainty in the euro zone and the prospects of a Greek default amid political drama in the country weighed on sentiment.


The Dow Jones Industrial Average lost 76.44 points, or 0.59%. The S&P 500 index fell 5.86 points, or 0.43%, while the NASDAQ slumped 11.49 points, or 0.39%.


The market struggled at the start as futures moved lower on European weakness as investors continued to fret over the political and economic uncertainty in the region. The specter of Greek default was back following the election results over the weekend, as pro bailout parties failed to form a government, leaving the door open for anti-bailout parties to try to form a government that will call for a moratorium on Greek debt payments.


As the session progressed the market unease continued, pushing major benchmark indices to a loss of more than 1% at the lows of the session. However, the equity market was able to cut losses as some skittish buyers returned looking for some bargains. Commodities also were hit on European political unrest, with crude oil prices falling for the fifth consecutive session, trading below $97 per barrel, while gold broke below the $1600 an ounce level.


Despite the recovery in the major benchmark indices, stocks closed lower with most of the S&P 500 sectors in negative territory. Consumer discretionary stocks were hit the hardest, losing more than 1% in the session, followed by financials, and materials. Healthcare and utilities were the only sectors that closed in positive ground.


In the consumer space, Fossil (NASDAQ: FOSL) plunged to the bottom of the S&P 500 after the company reported earnings that beat expectations by a penny, but its revenues that missed consensus and the company slashed its full-year guidance amid increased costs related to the acquisition of Danish watchmaker SKagen and overall weakness in Europe. Fossil plunged 37.57% to $78.52, despite several brokerage houses defending the stock, saying the selloff was overdone.


McDonald’s (NYSE: MCD), the world’s largest hamburger chain, lost 2.05% to $93.55 after it disappointed investors with its global comparable sales in April. The company said that sales climbed 3.3% in April, with the U.S. gaining 3.3%; Europe adding 3.5%; and Asia/Pacific, Middle East and Africa up 1.1%. The stock posted one of the biggest declines in the Dow Jones Industrial Average, closing below its 200day moving average at $93.75.


Also weighing on the sector, Discovery Communications (NASDAQ: DISCA) tumbled more than 6% in the session after the company missed earnings expectations amid increased losses from the OWN, the network they own in a partnership with Oprah, while Wynn Resorts (NASDAQ: WYNN) lost 4.76% to $119.23, slicing through support at its 50day and 200day moving average on an earnings miss.


Wynn said it earned $1.33 per share, excluding non-recurring items, $0.07 worse than consensus, on revenues that climbed 4.2% from a year ago period to $1.31 billion. The revenue increase was driven by the 9.8% increase in revenues from the Macau Operations, which was offset by an 8.1% decline in our revenues in Las Vegas, due to a lower hold in the quarter.


Also in the space, DirecTV (NASDAQ: DTV) climbed 0.26% to $48.03 after trading in negative territory for most of the session amid concern over its subscriber growth rate. However, DirecTV posted a gain in both profit and sales, which helped provide some support to the stock.


Financials fell as banks were under pressure in the session amid worries over a default in Greece and the potential that the response to the debt crisis might be compromised due to political infighting within the euro zone. Bank of America (NYSE: BAC) was one of the top laggards in the blue chip index, losing more than 2% to $7.79, practically giving back the gains from the prior session. The stock has support at its declining 200day moving average, currently at $7.30, while its 50day moving average is at $8.73.


Meanwhile in the materials sector, lower metal prices weighed on the space. Newmont Mining (NYSE: NEM), the largest gold producer, tumbled nearly 3% in the session as the price of the bullion broke below $1600 per once. Freeport McMoRan (NYSE: FCX) joined the laggards, with its shares losing 2.14% to $35.62 as copper prices retreated. Copper had been weaker since the overnight session, following weaker than expected Australian trade data, suggesting softer commodity demand from China.


Elsewhere, Apple (NASDAQ: AAPL) lost 0.23% to $568.18 after trading as low as $558.73 in the session. The stock lost more than 6% last week and has corrected more than 13% from its all-time high of $644, slicing through its support level at the 50day moving average, which left the stock open to test its April low of $555.


And Walt Disney (NYSE: DIS), the world’s largest media company gained 1.1% to $44.30 in the session ahead of the company’s quarterly results, posting the biggest gain in the blue chip index. In after hours, the stock was adding more than 1% to $44.86, a new all-time high after its earnings topped expectations. The company earned $0.58 per share, $0.03 better than consensus, on revenues that climbed 6% from a year ago period to $9.63 billion. 

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