Stocks Fight Back in Final Hour
NEW YORK ( TheStreet) -- U.S. stocks staged a mighty comeback in the final hour of trading Wednesday as a message from European leaders in support of Greece assuaged investor fears that the country is on a path to exit the eurozone.
Wall Street was fixated on Europe all day with the region's leaders set to meet in Brussels to discuss latest developments in the region. Indications that eurozone countries were told to prepare contingency plans for a possible exit of the single-currency bloc by Greece and the stern rejection of a proposal to issue eurobonds by Germany, the strongest member of the eurozone, sent the major U.S. equity indices sharply lower for most of the session and led to tumultuous trading across asset classes, most notably pushing the euro toward a two-year low.
But late in the session, reports came that leaders were reaffirming support for Greece at the meeting. A draft statement about the results of the "informal dinner" obtained by Dow Jones reads: "We look forward to the swift formation of a new government that will take ownership of the adjustment program and have a sufficient parliamentary majority to implement with determination the fiscal and structural reforms needed. This is the best guarantee for a more prosperous future of Greece in the euro area."
The Dow Jones Industrial Average dipped less than 7 points, or 0.05%, to close at 12,496, erasing an almost 200-point drop in the last hour of trading. The blue-chip index traded as low as 12,311 earlier in the session.
Selective buying in materials, transportation and capital goods sectors helped stocks stage a late recovery.
Breadth within the Dow was mixed with 15 out of the 30 components finishing in the red. General Electric TICKER TYPE="EQUITY" SYMBOL="GE"/> was unchanged.
Hewlett-Packard shares took a big hit ahead of its quarterly report after the closing bell. The big miss and tepid guidance of rival Dell(DELL) after Tuesday's closing bell raised concerns about the performance of HP.
After the bell, though, the company reported second-quarter profit excluding items of 98 cents per share, beating expectations and announced plans to layoff 27,000 people, sending shares higher by more than 5% in after-market trading.
Dell shares shed 17%, hitting a session low of $12.31, a level unseen in three years. Volume of more than 100 million was six times the issue's trailing three-month daily average churn.