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US stocks turn mixed as German official's comments dampen optimism about European summit deal
Stocks were mixed Wednesday as differences emerged between European officials struggling to craft a debt-crisis deal ahead of this week's summit. The Dow Jones industrial average erased early losses and rose 31 points in early afternoon trading.
Traders hope European leaders will agree by Friday to link their budgets more closely. France and Germany have called on them to renegotiate Europe's founding treaties and allow a central European authority to enforce greater fiscal discipline.
Hopes for a deal dimmed Wednesday when a German official said the governments appear unlikely to reach a deal this week. The official said it could take until Christmas.
"The pattern has been, get your hopes up, then be disappointed by EU summits, and that pattern has been in place for a while," said Steve Van Order, fixed income strategist at Calvert Investment Management.
The Dow was up 31 points, or 0.3 percent, to 12,181 as of 12:45 p.m. Among biggest winners in the Dow 30: JPMorgan Chase & Co. and Bank of America Corp., which rose 1.9 percent and 1.2 percent respectively.
The Standard & Poor's 500 index fell a point to 1,257. The Nasdaq composite index lost 4, or 0.2 percent, to 2,645.
Traders have been growing restless with the delays in getting a resolution to Europe's debt crisis. Rating agencies have warned of possible downgrades for nations using the euro if they do not quickly set a firm plan for solving the two-year-old ordeal.
In Europe, stock indexes were mostly lower and the yields on Spanish and Italian government debt rose. That means investors are demanding higher returns because of fears that one of those nations might default. Borrowing costs for Spain and Italy had fallen sharply until Tuesday, having reached dangerously high levels a week earlier. Germany's DAX fell 0.6 percent, Britain's FTSE 0.4 percent.
In corporate news:
' Citigroup Inc. fell 0.6 percent. The bank's CEO, Vikram Pandit, said Tuesday that it will cut 4,500 jobs and take a $400 million charge this quarter for severance and other related costs. The cuts would reduce Citi's payroll by about 1.5 percent.
' Struggling women's clothing company Talbots Inc. jumped 60 percent after private-equity firm Sycamore Partners made a $205.2 million takeover offer.
' Men's Wearhouse Inc. surged 15.8 percent after reporting third-quarter results that topped Wall Street's expectations and it raised its full-year earnings guidance.
Daniel Wagner can be reached at www.twitter.com/wagnerreports.