NEW YORK |
(Reuters) - News that Greece had reached a deal to secure a bailout was greeted with caution on Wall Street on Thursday, with investors taking a wait-and-see approach in a market that has become extended after weeks of gains.
Leaders from major Greek parties agreed on reforms and austerity measures needed in exchange for a new bailout package to avoid a chaotic default.
"There is still a fair amount of skepticism that these agreements won't amount to action, given the history," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "The market's taking a wait-and-see approach."
Euro zone officials say the full package must be agreed with Greece and approved by the EU, IMF and European Central Bank by February 15, so legal paperwork can be completed in time to avoid a chaotic default that could threaten the global economic recovery.
Banks .GSPF were among the weakest sectors in the S&P 500, slipping 0.3 percent. JP Morgan Chase .JPM fell 0.5 percent to $38.10.
Activitiy was subdued in the major stock indexes. The Dow Jones industrial average .DJI slipped 3.86 points, or 0.03 percent, to 12,880.09. The Standard & Poor's 500 Index .SPX fell 1.12 points, or 0.08 percent, to 1,348.84. The Nasdaq Composite Index .IXIC gained 1.98 points, or 0.07 percent, to 2,917.84.
In a measure of how extended the market has become, well over 75 percent of S&P 500 stocks are trading above their 26-week moving average. Nearly six weeks of back-to-back gains have left the index up 7 percent this year.
Providing support to the market was a report showing jobless claims unexpectedly fell last week, underscoring a firming in the labor market. That followed Friday's report of a better-than-expected rise in the number of jobs created in January.
The Nasdaq was helped by Apple Inc (AAPL.O), whose shares gained 3.6 percent to $494.81, an all-time high. Brokerage Canaccord Genuity said its checks indicated very strong iPhone 4S sales and said it increased its price target to $665.
But Cisco Systems Inc (CSCO.O) weighed on the tech sector as the network equipment maker's forecast failed to impress investors. Its shares were off 0.9 percent to $20.25.
The European Central Bank held interest rates at a record low on Thursday, seeing tentative signs of economic stabilization but refused to say what part it might play in averting a ruinous Greek default.
PepsiCo Inc (PEP.N) fell 3.9 percent to $64.13 after the beverage maker forecast lower-than-expected 2012 earnings, said it would cut thousands of jobs and increase advertising to reinvigorate sales in North America.
Groupon Inc (GRPN.O) slumped 11 percent to $21.88. The daily deal website posted an unexpected loss in the first quarterly report since it went public.
Diamond Foods Inc (DMND.O) tumbled 36.7 percent to $23.15 after the company removed its top management and said it would restate results due to improper accounting of payments to walnut growers.
Taleo Corp (TLEO.O) surged 17.3 percent to $45.66 after Oracle Corp (ORCL.O) said it would buy the recruitment software maker for about $1.9 billion. Oracle dipped 0.8 percent to $28.51.