S&P 500 bounces off 6-week low after Greece plan

By Edward Krudy

NEW YORK (Reuters) – The S&P 500 rebounded from earlier losses on Thursday following news of a fresh funding plan to help Greece pay off its mountain of debt.

A new three-year adjustment plan for Greece was agreed in principle by senior euro-zone officials, according to a source close to the negotiations.

The S&P 500 recouped some lost ground on word about the Greece plan after taking out its lowest point for May at 1,311.80, as nervous investors focused on key market levels to manage risk. The slide below May’s low had come a day after stocks’ worst one-day fall in nearly a year.

Stocks traded choppily before heading lower after the open as data showing stubbornly high jobless claims and lackluster chain-store sales gave investors little reason to get back into the market after a string of weak economic data.

“If you think the risks are rising, then you have got to take some money off the table just from a risk-reward perspective, and that’s what we’ve done,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.

Traders are honing in on 1,311 on the S&P 500, the index’s low point in May, as near-term support. If that level is broken at the close, it could open the window to a move back to the April low at 1,294, and the March lows near 1,250 to 1,260, the index’s 200-day moving average.

“It’s a trigger point for managers, as people don’t really know what’s going on,” said Robert Sluymer, managing director for U.S. technical research at RBC Capital Markets in New York. “Support levels become very, very important, particularly heading into the back half of the day.

“In the periods where you get a lot of stress in the market, people rely on technicals as a line in the sand where they’re going to take risk off,” he said.

Bank stocks stabilized after falling on news that Goldman Sachs received a subpoena from New York prosecutors seeking information on the investment bank’s role leading into the global financial crisis. Goldman’s stock fell 1.4 percent to $134.26.

The Dow Jones industrial average <.DJI> dropped 31.98 points, or 0.26 percent, to 12,257.79. The Standard & Poor’s 500 Index <.SPX> slipped 1.43 points, or 0.11 percent, to 1,313.12. But the Nasdaq Composite Index <.IXIC> rose 3.40 points, or 0.12 percent, to 2,772.59.

In other developments in the euro zone, a breakdown in talks between Spanish unions and employers to reform collective bargaining on wages highlighted the bumpy road that the region will face as it tries to tackle its overwhelming debt.

Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 422,000, while economists polled by Reuters had forecast 415,000.

Investors seemed reluctant to make big bets ahead of the non-farm payrolls data due on Friday, which is expected to show 150,000 jobs were added in May, according to a Thomson Reuters poll of economists.

Strength in education stocks sent the Nasdaq higher in morning trading after U.S. officials relaxed rules that could have cut off tuition aid to programs run by for-profit colleges.

Corinthian Colleges Inc surged 30.1 percent to $5.19. Apollo Group Inc jumped 10.1 percent to $46.45.

Some big U.S. retailers fell after reporting high gasoline and food prices took a bite out of their sales in May. Target Corp slid 0.9 percent to $48.13 and Gap Inc dropped 3.3 percent to $18.28.