Wall St opens Lower as Greece Deal Optimism fades

Wall Street opened lower on Wednesday after a setback in Greece’s debt talks even as data showed that the U.S. economy’s first-quarter contraction was smaller than earlier thought.

Greek Prime Minister Alexis Tsipras has attacked the stance of “certain” creditors as “strange” because they rejected proposals presented by Athens to bridge a budget gap, a government official said without referring to specific proposals or which of the three institutions Tsipras was blaming for the deadlock.

Tsipras will meet the heads of the European Central Bank, the International Monetary Fund and the European Commission in Brussels before a meeting of euro zone finance ministers at 1300 p.m. ET.

Greece needs fresh funds to avoid defaulting on a $1.8 billion debt repayment to the IMF on June 30.

“Tensions seem elevated between Greece and its creditors,” said Adam Sarhan, chief executive of Sarhan Capital in New York.

“There are worries that if Greece defaults, how will it affect the global economy because of the ramifications in peripheral nations like Portugal, Spain and Italy.”

The U.S. Commerce Department said gross domestic product fell at a 0.2 percent annual rate in the January-March quarter, instead of the 0.7 percent it estimated last month.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised to a growth of 2.1 percent from 1.8 percent.

Investors have been keeping a keen eye on economic data to see if the U.S. economy has recovered from a slow start at the beginning of the year. The Federal Reserve has said it remains data-dependent and expects to raise rates when it sees a sustained rebound in the economy.

Most economists and top Wall Street banks expect the Fed to raise rates in September as data points to a recovery.

Applications for U.S. home mortgages rose last week as interest rates dipped. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 1.6 percent in the week ended June 19.

At 9:34 a.m. ET, the Dow Jones industrial average .DJI was down 61.83 points, or 0.34 percent, at 18,082.24, the S&P 500 .SPX was down 3.51 points, or 0.17 percent, at 2,120.69 and the Nasdaq Composite .IXIC was down 9.25 points, or 0.18 percent, at 5,150.84.

 

Seven of the 10 major S&P 500 sectors were lower, with the materials index .SPLRCM leading the declines with a 0.32 percent drop.

Netflix (NFLX.O) shares were up 2.4 percent at $697.43, a day after the company’s board approved a seven-for-one stock split. Netflix’s shares have almost doubled this year.

Lennar (LEN.N) rose 5.5 percent to $51.68 after the second-largest U.S. homebuilder reported a better-than-expected 33 percent jump in quarterly profit as it sold more homes at higher prices.

Ford Motor (F.N) was up 1.4 percent at $15.51 after the company said it will test new car-sharing programs with U.S. and UK partners as part of a strategy to embrace alternatives to traditional car ownership.

Alcobra (ADHD.O) fell 15.4 percent to $7.07 after its drug failed in a mid-stage trial to treat a type of genetic disorder that could cause autism and attention deficit hyperactivity disorder.

Declining issues outnumbered advancing ones on the NYSE by 1,557 to 990. On the Nasdaq, 1,344 issues fell and 794 rose.

The S&P 500 index showed six 52-week highs and no new lows, while the Nasdaq recorded 23 new highs and 11 new lows.

Source: Reuters