New York/London: US stocks fell on Tuesday as aluminum maker Alcoa Inc missed its revenue target while the euro weakened against the dollar after Greece successfully sold short-term debt, but at very high yields.
US Treasury prices rose on safe-haven buying as investors remained cautious before a slew of key corporate earnings that will help gauge the strength of the economy.
German government bonds also rose after Greece easily sold a total of €1.2 billion ($1.63 billion) of 6-month and one-year T-bills, passing its first borrowing test since the euro zone reached a deal on a standby rescue package for the debt-laden country.
But analysts said the yields on the bills - 4.55% and 4.85% respectively - were still high, reminding investors of the high costs Greece will have to pay to further access the market.
“So it does not really change the underlying position that Greece has very tough times ahead,” said Ben May, economist at Capital Economics in London. “It’s going through a deep recession, and that’s going to lead the debt-to-GDP ratio to surge higher.”
In the United States, the cautious mood was reinforced by quarterly results that showed Alcoa Inc missed its revenue target, even as earnings were in line, supported by rising prices.
“This will certainly be an earnings period where there is continued focus on revenues,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.
“Investors are looking for signs of revenue growth to show that the economic rebound is real and is generating real demand.”
The Dow Jones industrial average lost 27.36 points, or 0.25%, to 10,978.91, while the Standard & Poor’s 500 Index declined 5.04 points, or 0.42%, to 1,191.44. The Nasdaq Composite Index was down 6.48 points, or 0.26%, at 2,451.39.
Alcoa’s shares fell 2.4%.
The FTSEurofirst 300 index fell 0.4% while emerging stocks declined 0.85%. Losses were intensified after Wall Street opened lower.
Analysts said investors were wary ahead of key first-quarter earnings statements this week, including from JPMorgan Chase & Co, Google Inc, Bank of America Corp and General Electric Co.
The cautious mood inspired investors to buy safe-haven US Treasuries. The benchmark 10-year US Treasury note was up 1/32 in price, with the yield at 3.836%.
Euro zone debt gained after the Greece debt sale. June Bund futures hit a session high of 123.12, up 45 ticks on the day, having broken through resistance in the 123.00 area. But the euro fell to a session low as investors refocused on the fiscal problems of the euro zone, leaving aside earlier pessimism about February US trade data that had weighed on the greenback.
The European single currency weakened 0.17% to $1.3561.
Against the Japanese yen, the dollar was flat at 93.21 as a larger-than-expected US trade deficit prompted investors to debate the strength of the recovery in US. manufacturing.
Crude oil futures fell more than 2% in New York, pushing lower for a fifth consecutive session, on speculation that inventory reports will show stockpiles rose again last week.
US light crude oil fell $1.65, or 2.06%, to $82.68 per barrel.