Stocks retreat on jitters about Europe, earnings

CNN Wire Service

(CNN) — U.S. stocks pulled back modestly Wednesday, as investors found new reasons to worry about Europe’s economy. Less-than-stellar earnings from two big tech companies added to the sluggishness.

The Dow Jones industrial average slipped 64 points, or 0.5%. The S&P 500 lost 4 points, or 0.3%. The Nasdaq moved down 18 points, or 0.6%.

“Investors are thinking again that the calm about Europe over the last three to four months may have been premature,” said BTIG’s chief strategist Dan Greenhaus.

Spain released data showing that Spanish banks held more problem loans than expected, sending its stock market down and causing other European markets to fall.

That news added to worries over whether the government in Madrid may be forced to seek a bailout. On Wednesday, German two-year debt sold at a record-low yield, with investors fleeing to the perceived safety of Europe’s largest economy amid the troubles elsewhere.

“It’s indicative of lingering anxieties among investors — the willingness to hold low yields,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The yield on the German two-year note sat at 0.14% early Wednesday. Meanwhile, Spanish bond yields have been trending higher recently, with the 10-year note hovering just under 6%.

Several tech heavy-hitters released first-quarter earnings after Tuesday’s closing bell.

Shares of IBM dropped after its earnings beat analysts’ estimates but missed on sales. Intel’s sales and earnings beat expectations, but the stock also fell Wednesday.

“I think that the performance of IBM and Intel today tells you that even beating estimates isn’t enough, and that the market may have run too far,” said Joe Saluzzi, co-head of equity trading at Themis Trading.

Overall, earnings have been better than expected.

Of the 56 companies in the S&P 500 that have reported their quarterly results thus far, 44 have beat analyst estimates, with seven matching and just five coming up short, according to Capital IQ.

U.S. stocks rallied Tuesday as worries about Europe eased and investors parsed the latest round of corporate results. The Dow and S&P 500 posted the best one-day gains since March 13; the Nasdaq had the best gains since December 20, 2011.

Companies: Shares of Chesapeake Energy hit a 52-week low after Reuters reported that the CEO personally borrowed $1.1 billion from the company.

Yahoo reported profits late Tuesday that topped analyst estimates, sending shares higher Wednesday as investors hope the turnaround strategy of new CEO Scott Thompson will work.

Financial stocks were back in the spotlight Wednesday, with several notable firms reporting earnings.

Bank of New York Mellon reported its quarterly results before the opening bell, posting earnings and revenue in line with analyst expectations. PNC reported earnings of $1.44 a share, in line with expectations, on $3.73 billion in revenue.

First Republic Bank beat on revenue and reported earnings in line with expectations. The firm also announced that it was initiating a quarterly dividend of 10 cents a share.

Asset manager BlackRock posted earnings of $3.16 a share, beating analyst projections of $3.04, on $2.25 billion in revenue.

Oilfield services giant Halliburton also reported better-than-expected earnings, sending shares higher.

After Wednesday’s close, investors will get the latest numbers from American Express, eBay and YUM! Brands

Analysts predict American Express will post earnings of $1 a share, while eBay’s earnings are expected to come in at 56 cents per share. YUM! is expected to post earnings of 73 cents a share.

Economy: A report on crude inventories showed that inventories had increased slightly more than economists predicted.

Currencies and commodities: The dollar fell against the British pound but gained against the euro and the Japanese yen.

Oil for May delivery rose fell $1.62 cents to $102.54 a barrel.

Gold futures for April delivery fell $8.10 to $1,643 an ounce.

World markets: European stocks closed lower. Britain’s FTSE 100 slipped 0.4%, the DAX in Germany shed 1.1% and France’s CAC 40 dropped 1.6%.

Asian markets ended higher. The Shanghai Composite added 1.0%, the Hang Seng in Hong Kong climbed 1.1% and Japan’s Nikkei gained 2.1%.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.98%.