By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market fell, but ended
well off the day's lows, as a decision by one of Portugal's biggest
banks to delay a debt payment reminded investors of the fragility
of Europe's banking system.
Investor worries centered on Espirito Santo Financila Group SA,
although those worries seemed to abate over the course of the
trading session. Also read: 5 things to know about Banco Espirito
Santo and Europe.
Meanwhile, U.S. economic data continued to show an improving
economy. The number of people who applied for unemployment benefits
in the first week of July fell to a seven-year low.
The S&P 500 (SPX) closed down 8.12 points, or 0.4%, to
1,964.71. The Dow Jones Industrial Average (DJI) dropped as much as
180 points at session lows, but ended the day down 70.35 points, or
0.4%, at 16,915.20. The Nasdaq Composite (RIXF) lost 22.83 points,
or 0.5%, to 4,396.20.
Read the recap of MarketWatch's live blog of today's
stock-market action
Steven Wieting, global chief investment strategist at Citi
Private Bank, played down the concerns about Portugal for U.S.
stocks. He said investors are just using downbeat economic and
banking news from Europe and Asia as an excuse to sell.
"The reality is that we had a 6% rally in just six weeks, and
markets were looking for an excuse to correct. Nothing has changed
fundamentally, neither in the U.S., nor in Europe," Wieting said.
"Rising markets tend to ignore single data points, but in falling
markets, fear gets amplified that someone else will sell."
Still to come is the first major speech from Stanley Fischer as
vice chairman of the Federal Reserve. The speech, at 4:30 p.m.
Eastern in Cambridge, Mass. will focus on financial reform.
On Friday, the earnings season kicks off in earnest as Wells
Fargo & Co.(WFC) reports before the opening bell. Read: Here's
what investors can expect from Wells Fargo earnings.
European stocks sell off; gold rises
In overseas markets, the Stoxx Europe 600 index closed lower for
a fifth day, dropping 1.1% as banks tumbled after Espirito Santo
Financial Group SA , the controlling lender of Banco Espirito Santo
SA , suspended trading its own shares and bonds, citing "ongoing
material difficulties."Also Read: Portuguese government yields soar
amid banking turmoil
Unexpected drops in industrial production in May in both Italy
and France also weighed on sentiment.
The Nikkei 225 index fell 0.6%, but other Asian markets were
flat or slightly higher. Chinese exports for June rose 7.2% in June
from a year earlier, far below the 10% rise expected from
economists surveyed by The Wall Street Journal.
Gold futures (GCQ4) jumped sharply to their highest settlement
in nearly four months.
Oil prices rebounded on Thursday, with the U.S. benchmark
putting an end to a losing streak that spanned nine sessions, while
the dollar(DXY) stayed higher.
United Continental rallies; Potbelly plunges on earnings
United Continental Holdings Inc. (UAL) shares leapt 7.1% after
the company's revenue per available seat mile, a closely watched
sales metric in the airline industry, increased by 3.5% in the
second quarter from a year earlier.
TRW Automotive Holdings Corp.(TRW) jumped 7.9% after the
auto-parts maker confirmed it has received a nonbinding buyout
offer and said it is evaluating the bid as well as other
options.
Lumber Liquidators Holdings Inc. (LL) slid 21% after the
hardwood-flooring retailer slashed its outlook for the year.
Potbelly Corp. (PBPB) shares dropped 23% after the sandwich shop
chain warned of weaker-than-expected sales in the second quarter
late Wednesday. (Read more about the biggest movers here:
http://www.marketwatch.com/column/movers%20%26%20shakers.)
More must-reads from MarketWatch:
7 signs a 10%-plus drop may be coming for stocks
Ending unemployment benefits didn't cut jobless rate
Jeff Reeves: 7 signs a 10%-plus drop may be coming for
stocks
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