U.S. stocks pared earlier losses in late Tuesday afternoon trade, with the S&P 500 reaching session highs after falling below its 200-day moving average, as investors awaited developments in the Greece debt crisis.
The S&P 500 fell below that key level for its first time since October 20, joining the Dow Jones industrial average in negative territory for the year. The blue chip index is about 1 percent lower for the year and hit session highs after falling more than 200 points.
“We broke the 200 day moving average … and around that time the market began to stabilize,” said Robert Pavlik chief market strategist at Boston Private Wealth, adding that the S&P 500 also hit a support level of 2,045 and has since bounced back.
The major averages opened higher but quickly turned lower, with the Nasdaq Composite underperforming and falling more than 1 percent, before trading along the flatline.
“I think there are two factors here: one is a technical bonce on the S&P from the 2,045 support level and another is the [International Monetary Fund] warning the Fed not to raise rates again,” said Peter Cardillo, chief market economist at at Rockwell Capital.
The IMF reiterated that the Federal Reserve should not raise interest rates until 2016 on Tuesday.
Euro zone leaders held an emergency summit in Brussels to discuss Greece. The European Union later said all 28 of its heads of state will convene to discuss Greece’s situation on Sunday.
“The market is taking a wait & see approach with what’s going to happen in Greece, what’s going to happen in China,” said Adam Sarhan, CEO of Sarhan Capital.
“We’re sort of in an news vacuum and all the attention is on [Greece],” said William Lynch, director of investments at Hindsdale Associates.
Greece will submit a new aid proposal to European creditors “maybe” on Wednesday, euro zone officials said, with Athens’ European partners convening in Brussels for emergency talks.
However, the government’s latest proposals differ only slightly from previous versions, German media reported.
“Optimism over getting a deal done faded away here because the IMF is looking at Greece exactly the same as before,” said Art Hogan, chief market strategist at Wunderlich Securities. “We’re still very much held hostage to what’s next. The market will be hard-pressed to gather any enthusiasm.”
“The good news is, as we look at the selloff thus far, it could have been a lot worse,” he said.
Stocks closed mildly lower on Monday despite the Greek’s rejection of its creditors proposals in a Sunday referendum. However, the Dow Jones industrial average closed below its 200-day moving average.
“The major indices are retesting short-term support on weakness in the energy and materials sectors,” BTIG Chief Technical Strategist Katie Stockton said in a note. “An intraday trading range has formed and it is characterized by positive divergences that bode well for a breakout in the days ahead. We would add exposure once the S&P futures clear 2082 because it would affirm the short-term oversold “buy” signal that is in place per the daily stochastics.”
In U.S. economic data, May international trade numbers showed that the U.S. trade deficit widened, fueled by a drop in exports.
Bond yields continued to fall, with the U.S. 10-year yield below 2.20 percent, before trading around 2.21 percent and the 2-year note yielded 0.56 percent. The German 10-year bund yield was 0.64 percent.
The dollar gained nearly 1 percent, while the euro hit a low of $1.0915, its lowest since June 2.
JOLTs job openings data came in slightly higher for May than the previous month. Consumer credit figures are due at 3 p.m. The U.S. Treasury is scheduled to hold a three-year note auction later in the day.
The Federal Reserve releases its meeting minutes Wednesday afternoon.
The benchmark Shanghai Composite fell more than 1 percent amid doubts that steps taken by Beijing in the past week would shore up battered stock markets.
Oil futures closed down just 20 cents at $52.33 per barrel after trading down about 1 percent for most of the session.
Companies reporting earnings this session include The Container Store.
“I think second-quarter earnings will be more important than what first quarter earnings and what third quarter earnings will be” because they will show hot companies are coping with the appreciation of the dollar, said Maris Ogg, president at Tower Bridge Advisors.
Ogg added that, if Q2 earnings do not disappoint, investors will start formulating their 2016 outlooks.
The S&P 500 traded up 7 points, or 0.35 percent, at 2,075, with materials leading three sectors lower and utilities and consumer staples leading advancers.
The Nasdaq traded down 9 points, or 0.19 percent, at 4,982.
Decliners were a slight step ahead of advancers on the New York Stock Exchange, with an exchange volume of 622 million and a composite volume of 3.12 billion.
Gold futures settled down $20.60 to $1,152.60 an ounce.