Wall Street's messy May gets a little worse

By PALLAVI GOGOI, AP Business Writer

NEW YORK (AP) — An already dreary May got a little worse for financial markets Wednesday as Greece's political chaos dragged on. The euro fell to its lowest point since January as investor confidence in Europe's shared currency weakened further.

The Standard & Poor's 500 index was headed for its fourth loss in a row and the Dow Jones industrial average flitted between tiny gains and losses. Prices for metals and energy fell.

In Greece, new elections were called for June 17 after coalition talks to form a government fell apart, and the president said depositors were pulling hundreds of millions of euros out of banks, weakening the country's strained financial system.

Doug Cote, chief market strategist of ING Investment Management, said Greek leaders would realize that tightening the country's budget would be better than the chaos that would follow if Greece abandoned the European Union, its financial lifeline.

"Is there the possibility that Greece would choose Armageddon? Sure," he said. "But why they would choose to inflict more pain on the Greek people is beyond me."

The Standard & Poor's 500 was down three points at 1,327. The Nasdaq composite fell 17 to 2,877. The Dow was down six points at 12,626.

The Dow has been on a nearly unbroken slide since May 1, when it closed at a four-year high. Since then it has had just one up day, gaining 20 points on May 10. The average has lost 4.4 percent this month and is headed for its first down month since September.

The dollar continued its two-week climb against the euro. The dollar strengthened to $1.27 per euro, the highest level since January, as traders worried about a messy exit from the euro bloc by Greece.

The yield on the benchmark 10-year U.S. Treasury note fell to 1.76 percent, its lowest this year.

There was positive news on the economy, but it wasn't enough to get investors excited. Construction of homes rose 2.6 percent from March, and U.S. factory production increased 0.6 percent in April, helped by a gain in auto production.

"We're in a period where there's little conviction to buy," said Richard Cripps, chief investment officer at broker Stifel Financial. "The road ahead is too uncertain because of European concerns and the presidential election later this year."

As signs of a global economic slowdown persist, prices of commodities have come off their highs. Crude oil continued its march downward from $105 at the beginning of the month and was trading at $93 at midday, down $1 on the day. The price of gold prices fell $10 to $1,547, the lowest since December.

Target rose after a strong earnings report. Target said revenue at stores opened at least a year rose 5.3 percent, the strongest performance in six years for that period.

Target's results may illustrate that Americans are beginning to spend cautiously as economic uncertainty persists. Though the job market is still shaky, falling gas prices have given shoppers hope.

Worries about Europe were also spreading beyond Greece. Spain's prime minister warned that the country, which is trembling under a 24.4 percent unemployment rate, could be locked out of international markets due to problems in the EU.

In India, the rupee hit an all-time low against the dollar as investors seek safe places to put their money. The rupee sank to 54.44 against the dollar Wednesday, surpassing the prior low of 54.39 on Dec. 15.

Among other stocks making big moves:

• JC Penney plunged over 18 percent, the most in the S&P 500 index, after the retailer reported a bigger-than-expected first-quarter loss. Sales plummeted as shoppers are rejecting the retailer's new plan of getting rid of big sales throughout the year in favor of everyday low pricing.

• Abercrombie & Fitch fell 14 percent after reporting that its first-quarter net income shrank 88 percent because of higher costs and declining sales in established stores and in Europe.

• General Electric rose 4 percent, the most of the 30 stocks in the Dow, after the company said its finance unit will pay a special dividend of $4.5 billion to the parent company this year. It had suspended the payments in 2009 during a freeze in credit markets.