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Stocks give up early gains on Wall Street as tech profits and the price of crude oil drop
NEW YORK (AP) ¯¯¯ Early gains on Wall Street were mostly gone by midday Tuesday following lower profits from technology companies and a steep drop in oil prices.
The Dow Jones industrial average was up 21 points to 12,758. It was up 94 shortly after the opening bell.
The broader Standard & Poor's 500 slipped more than one point to 1,351. The Nasdaq dropped nine points to 2,923.
Chip maker Applied Materials fell sharply after reporting that a slowdown in China and Europe led to an 11 percent slump in second-quarter revenue. The company had previously forecast a gain of 3 percent. Other technology companies also fell.
The bad news outweighed hopeful developments in Europe. Early Tuesday, European finance ministers agreed on the terms of a bailout for Spain's banks. The first installment of $37 billion in aid can be ready by the end of the month.
A resolution to a labor dispute in Norway weighed on oil prices, which pushed energy stocks lower. Early Tuesday, the Norwegian government imposed an arbitration in a disagreement over employee retirement benefits that could have forced the oil industry to prepare for a historic shutdown in the North Sea.
Benchmark crude oil fell $1 to $85 a barrel in New York. Major energy companies fell as a result, including Occidental Petroleum, down $1 at $84.19, and ConocoPhillips, down 52 cents at $53.81.
Natural gas producers also took a hit from a sharp drop in the price of natural gas, which was down 2 percent at $2.81 per 1,000 cubic feet. Cabot Oil & Gas slumped 96 cents to $39.31 and Chesapeake Energy gave up 81 cents to $19.17.
In Europe, the deal to aid Spain helped push the yield on its benchmark 10-year government bond down to 6.8 percent. On Monday, that country's key borrowing rate surged to 7 percent, a dangerously high level. The lower yield means investors are less fearful about the country having trouble paying its debts.
Portugal, Ireland and Greece all had to ask for help from international lenders after spikes in their own borrowing rates made it unaffordable for them to raise money from selling bonds on the open market. Spain is the largest European country to date to seek international assistance.
In corporate news, ASML Holding, the world's largest supplier of equipment to computer chip makers, surged following news that Intel intends to take a 15 percent stake in the company for $3 billion. Intel will also help fund ASML's research into new technologies. The stock jumped $4.38 to $52.84.
Alcoa lost 31 cents to $8.45 after a financial analyst cut his estimate for the company's 2012 earnings. The aluminum maker was the biggest loser among the 30 companies in the Dow index. Alcoa reported Monday that it beat analyst estimate for earnings in the second quarter but that revenue dropped due to slowing world demand for the metal.
Embattled BlackBerry maker Research in Motion fell 38 cents to $7.29. The company's CEO, Thorsten Heins, told a shareholders meeting that he isn't satisfied with the company's performance. Two weeks ago the company announced disappointing earnings, plans to cut 30 percent of its workforce and the latest delay in BlackBerry 10.