Wall Street at Close Report for August 21, 2012

By Kate Gibson, MarketWatch 

NEW YORK (MarketWatch) — U.S. stocks turned lower Tuesday, with the S&P 500 index retreating from a four-year high as Apple’s drop overshadowed optimism that Europe would move to contain its debt crisis. 

“We were more impressed by something that was said in Atlanta than what was said in Germany,” said Art Hogan, equity strategist at Lazard Capital Markets of hawkish comments by Atlanta Federal Reserve Bank President Dennis Lockhart. 

The market also faced resistance at multi-year highs, and was also looking for a reason to pullback, Hogan added. 

After climbing 59 points, the Dow Jones Industrial Average DJIA -0.51%  lost 68.06 points, or 0.5%, to 13,203.58. 

The S&P 500 Index SPX -0.35%  slid 4.96 points, or 0.4%, to 1,413.17, with telecommunications, utilities and technology pacing the losses among its 10 major industry groups. 

Since its Oct. 9, 2007 high, the market is down 9.4% overall, but information technology is up 16.6%, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “Take out Apple, and technology is down 4.1%,” he said. 

The Nasdaq Composite Index COMP -0.29%  fell 8.95 points, or 0.3%, at 3,067.26.

Tuesday’s drop is the biggest hit for all three indexes since Aug. 2. 

For every three stocks that gained four fell on the New York Stock Exchange, where composite volume approached 3.3 billion. 

Apple vs. Samsung insider's guide Ina Fried offers a look at the judge, the setting and the billions at stake in the Apple-Samsung trial; Bill Panagos gives a legal analysis. (Photo: AP) 

Apple Inc. AAPL +0.26%  shares turned lower along with reports the technology company and Samsung Electronics Co. had failed to settle a potentially costly patent dispute, with a federal judge Tuesday afternoon starting to read instructions to a jury in San Jose, Calif. 

“When Apple started to give back too much of its intraday gains, the Nasdaq futures gave it all back and Apple turned from a 10-point gain to a 9-point loss before stabilizing,” said Elliot Spar, market strategist at Stifel Nicolaus. 

Shares of Apple finished at $656.06, down $9.09 or 1.4%.

Gains gone

Before the gains evaporated, equities had been positioned to close above four-year highs.

“The market’s had some good sponsorship from the economic reports we’ve had the last few weeks; expectations had dropped to such low levels, it opened the door to positive surprises to the upside,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co., of U.S. economic data, some of which has surpassed estimates, including the July jobs and retail-sales reports. 

“The European situation, while certainly not resolved, has allowed the pressure to come off the dollar, which has helped commodity prices, the energy sector and the material sector, and added to the market’s upside pressure as well,” he said. 

The dollar index DXY -0.69%  on Tuesday fell to its lowest level since July, with the U.S. currency losing ground against currency rivals including the euro EURUSD -0.02% . Read more on currencies.

“The strong dollar was really a negative for the markets; it’s not only deflationary, but hurts our exports, and when you translate export profits back into dollars it hurts earnings,” noted Bittles. “If the dollar starts to slide, earnings outlooks improve, so once again contrary opinion is playing a big role here.”

Urban Outfitters Inc. URBN +18.22%  rallied 18% after the teen retailer reported better-than-expected earnings for the second quarter. 

Best Buy Co. BBY -1.38% lost 1.4% after its results came in below estimates and the electronics retailer suspended its earnings outlook. 

U.S. Treasury prices fell, lifting the yield on the benchmark 10-year note 10_YEAR -0.44%  used in determining mortgages and other consumer loans to 1.804%. Read more about bonds. 

 

Wall Street’s initial rise echoed gains by equities around the globe on thinking European leaders would move to contain the region’s debt crisis. 

Luxembourg Prime Minister Jean-Claude Juncker, head of the group of euro-zone finance ministers, meets with Greek Prime Minister Antonis Samaras on Wednesday in Athens, and French President François Hollande and German Chancellor Angela Merkel meet the next day in Berlin. 

Kate Gibson is a reporter for MarketWatch, based in New York.