The euro rose against the dollar on Tuesday on expectations that a request by Spain for a bailout is imminent, but U.S. stocks ended little changed on uncertainty of when Madrid will make its request and growing uneasiness over third-quarter earnings.
European officials said on Monday that Spain is ready to make the request for a euro zone bailout as early as next weekend. On Tuesday, however, Spanish Prime Minister Mariano Rajoy said that a request for European aid was not imminent.
A request for a bailout is viewed as positive for financial markets because it would trigger Spanish bond buying by the European Central Bank, which would lower the country’s borrowing costs. It would also remove another layer of uncertainty in the region’s three-year old debt crisis. “Spain being rescued would be good for risk assets and ultimately global growth, but while the benefits are largely priced in, we’re still getting conflicting signals that understandably have investors apprehensive,” said Brian Barish, president of Cambiar Investors LLC in Denver, who helps oversee $7 billion.
“Until we get some kind of clarity, we should expect a lot of volatility and difficulty holding onto gains,” Barish said. The MSCI global stock index was little changed at 333.35.
Wall Street stocks gave up early gains to finish largely unchanged in a volatile session as a rally that took the S&P 500 to its highest in nearly five years stalled.
The Dow Jones industrial average ended down 32.75 points, or 0.24 percent, to 13,482.36. The Standard & Poor’s 500 Index closed up 1.26 points, or 0.09 percent, to 1,445.75. The Nasdaq Composite Index gained 6.51 points, or 0.21 percent, to 3,120.04.
The Dow was pressured by stocks closely tied to the pace of growth, including heavy machinery maker Caterpillar Inc and plane maker Boeing Co. A major headwind for the global economy has been falling demand from Europe, which has been drifting toward recession.
US stocks flat, euro up as Spain bailout in focus
