Wall St dips, mood fragile after Europe elections

NEW YORK Mon May 7, 2012 8:03pm IST

Traders work on the floor of the New York Stock Exchange, May 4, 2012. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange, May 4, 2012.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - The S&P 500 and Nasdaq were little changed Monday, rebounding from steep losses early in the session after election results in Europe clouded the region's outlook as it grapples with a financial crisis.

Financial shares were up 0.13 percent, helping to briefly push the S&P into positive territory. Wall Street suffered a sharp decline on Friday, and the S&P racked up its worst weekly performance this year.

Greeks voted out ruling parties in elections on Sunday, dealing a blow to the fragile political consensus that has kept Europe's currency bloc intact through more than two years of crisis. Greece's banking index slid 13 percent.

"The election results were not a complete surprise, but now investors need to brace for the eventuality of Greece leaving the euro zone," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

"While the overall trend in equities still seems pretty attractive, I'm a little disturbed by the deterioration we're seeing on the momentum side."

The Dow Jones industrial average was down 40.38 points, or 0.31 percent, at 12,997.89. The Standard & Poor's 500 Index dipped 1.55 points, or 0.11 percent, at 1,367.55. The Nasdaq Composite Index was off 1.84 points, or 0.06 percent, at 2,954.50.

Worries over Europe have helped to drive weakness in U.S. equities in recent months, with investors concerned about its effects on global growth and corporate profits.

Bearish U.S. economic data, most recently Friday's payrolls report for April, have exacerbated fears growth may be stalling.

In France, Socialist Francois Hollande won the presidency over incumbent Nicolas Sarkozy, raising pressure on Germany to pursue a more growth-oriented approach to the regional crisis.

The U.S. earnings season is winding down, and of the 415 S&P 500 companies reporting as of Friday morning, 67.5 percent exceeded estimates, according to Thomson Reuters data. In contrast, more than 80 percent had beaten expectations at the start of the season.

Cognizant Technologies Solutions Corp slumped 15.3 percent to $59.09, the biggest decliner on the S&P, after cutting its profit and revenue outlooks.

On the upside, Tyson Foods Inc posted higher-than-expected earnings. The stock was the S&P's biggest percentage gainer, climbing 3 percent to $18.60.

Satellite imagery company DigitalGlobe Inc fell 6.1 percent to $15.43 a day after it rejected a hostile bid from rival GeoEye Inc. GeoEye was off 2.3 percent to $24.25.

With last week's decline, the S&P 500's 3.5 percent pop from an April closing low to a May closing high has largely been erased.

The index has found support around the April closing low of 1,358.59 in the past, but a breach could take it back to 1,340. The benchmark index is moving away from strong resistance at 1,400 after failing to make a convincing move above it.

(Editing by Jeffrey Benkoe)

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