DOW - Dead cat stops bouncing?

Dow 10,510.95 -114.88 -1.08%

Yahoo Finance News

An early bid gave the major equity averages a solid start, but the tone of trade soon turned negative as the dollar rallied against the euro. Stocks settled with sharp losses near session lows.

News that the European Union handed Greece some 14.5 billion euros to keep the country out of default helped usher in buying among overseas markets. The accompanying gains helped provide support for domestic stocks to extend their rebound from the prior session.

The mood among global participants was further supported by signs of renewed strength in the euro. However, the euro soon resumed its backslide. Its downturn steepened following news that Germany will ban naked short selling of certain financial stocks, credit default swaps, and government bonds. The euro dropped a sharp 1.5% to a fresh four-year low that was just above 1.2200 per dollar, which helped the Dollar Index spike 1.1% to a fractionally improved 52-week high.

The euro's retreat and the dollar's rally put in motion a gradual, broad-based selling effort, which lasted for most of the session. Stocks attempted to steady their descent in the final hour, but still chopped into the close to settle near their worst levels of the day.

Banking issues were among the most out of favor. In turn, the KBW Bank Index dropped 3.7% to log its lowest closing level in about two months. Weakness among bank stocks dragged down the financial sector to a 2.8% loss, which was the worst of any major sector.

Materials stocks saw one of the most dramatic turnarounds. The sector had been up more than 2% at its session high, but closed with a 1.5% loss.