Stock market cuts its losses with late comeback

Associated Press Modified: June 28, 2012 at 4:45 pm •  Published: June 28, 2012
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NEW YORK (AP) — When the stock market began tumbling Thursday, many people assumed the selloff had something to do with the Supreme Court ruling to uphold President Barack Obama's health care law. But for a lot of investors, it was the same old concerns about Europe, along with a few new worries.

The market fell sharply in early trading, before the high court's announcement, as investors questioned whether a European Union meeting in Brussels would yield the same results as many meetings before it — vague pledges, rather than concrete plans for what to do with struggling countries like Greece and Spain.

Bank stocks also declined, in part because of a report that a trading loss at JPMorgan Chase first estimated at $2 billion could be as much as $9 billion.

U.S. stocks still closed lower for the day, but they bounced back in the last half-hour of trading. The Dow Jones industrial average closed down nearly 25 points, after falling as much as 177.

There were varying explanations for the late comeback, but most seemed to focus on Europe, including rumors that the European Central Bank would cut interest rates and that EU leaders might actually emerge from this week's meetings with a plan. Late Thursday, a top EU official said leaders had agreed to devote $149 billion to "immediate growth measures."

Nicholas Colas, ConvergEx Group chief market strategist, said blaming the health care ruling for the market's losses was "a convenient excuse."

"No doubt that the court's decision was disappointing," he said, "but I really think the indecisiveness of European policy makers at the nth summit on the same topic is the cause of the decline."

Other traders had similarly low expectations.

"The first one thousand summits, I was pretty excited," deadpanned Jeff Sica, president and chief investment officer of SICA Wealth Management in Morristown, N.J.

In the U.S., the Dow Jones industrial average was down about 100 points around 10 a.m., just before the Supreme Court ruled. Then it fell more steeply but recovered most of those losses, ending down 24.75 points at 12,602.26.

The Standard & Poor's 500 index dropped 2.81 points to end at 1,329.04 and the Nasdaq composite fell 25.83 points to 2,849.49. Both indexes bounced back from bigger losses.

There was disappointment to be found in almost all corners of the market. The Commerce Department said the American economy expanded at a 1.9 percent annual rate in the first quarter, a weak pace that isn't expected to pick up. Family Dollar fell after reporting that it missed analysts' profit estimates.

David Lefkowitz, senior equity strategist at UBS wealth management research in New York, was immune to the media frenzy around the Supreme Court ruling. He watched for news out of Europe because, he said, "There's not much else going on." Health insurance companies make up only about 1 percent of the Standard & Poor's 500, he said.

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