US STOCKS-Wall St finishes flat after late rebound

* Stocks stage late rally, aided by euro

* Buying opportunity overtakes euro-zone fear

* Dow off 0.2 pct, S&P up 0.04 pct, Nasdaq off 0.1 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Adds quote)

By Chuck Mikolajczak

NEW YORK, May 25 (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) staged a furious
late-day rally on Tuesday to push the S&P 500 into positive
territory as the focus shifted from European debt woes to
buying after shares hit six-month lows.

Major U.S. indexes had fallen more than 3 percent early in
the session on growing questions about the stability of the
European banking system after a small Spanish bank failed over
the weekend.

“It’s a selling climax. This has all the looks to me of a
capitulation,” said Keith Springer, president of Capital
Financial Advisory Services in Sacramento, California.

Equities have been under nearly constant selling pressure
the last few weeks. The morning’s action reflected the
market’s nervousness as the S&P 500 fell through the May 6
“flash crash” level to its lowest level since early November
2009, down 14.5 percent from its late April closing high.

“Today is one of those days where the market stops and
thinks maybe we have sold too much, maybe we have priced in
Europe too much,” said John Canally, investment strategist and
economist for LPL Financial in Boston.

“People are beginning to realize that there can’t be a
silver bullet that can instantly fix this problem.”

Strategists linked the rebound in stocks to strengthening
in the euro. The single currency earlier fell to an 8 1/2-year
low against the yen and approached a 4-year low versus the
dollar, while safe-haven U.S. Treasuries rallied. For details,
see [ID:nN25134767]

The Dow Jones industrial average (.DJI: ) dropped 22.82
points, or 0.23 percent, to 10,043.75. But the Standard &
Poor’s 500 Index (.SPX: ) gained just 0.38 point, or 0.04
percent, to end at 1,074.03. The Nasdaq Composite Index
(.IXIC: ) shed 2.60 points, or 0.12 percent, to 2,210.95.

MATERIAL WORLD

The euro’s strength has been a proxy for risk appetite and
confidence in the euro-zone economy.

European markets fell to their lowest level in nearly nine
months while the Libor three-month dollar rate rose to the
highest level since July. The Spanish government’s rescue of a
local bank over the weekend made banks leery of lending to
European institutions. Rising Libor rates raise banks’ funding
costs.

Shares of materials companies and retailers were among the
top performers, with the S&P Materials Index (.GSPM: ) up 1.6
percent and the S&P Retail Index (.RLX: ) finishing up 1.4
percent.

AK Steel (AKS.N: ) jumped 11.4 percent to $15.06 after a
Citigroup upgrade while AutoZone Inc (AZO.N: ) advanced 5.6
percent to $194.57 after posting third-quarter earnings.
[ID:nN25196127] and [ID:nN25118616].

Earlier, the three major U.S. stock indexes had fallen
about 3 percent to session lows.

VIX DROPS AS VOLUME JUMPS

The CBOE Volatility Index (.VIX: ) or VIX, known as Wall
Street’s fear gauge, fell 9.7 percent to 34.61 after reaching
an earlier high of 43.74 — a gain of 14.1 percent.

U.S. consumer confidence rose for the third straight month
in May to the highest in more than two years. But that was
countered by a report showing single-family home prices
dropping in the first quarter on renewed price pressure as
federal aid faded away. [ID:nN25268004]

Volume was strong with about 13.06 billion shares traded
on the New York Stock Exchange, the American Stock Exchange
and Nasdaq — well above last year’s estimated daily average
of 9.65 billion.

Declining stocks outnumbered advancing ones by a ratio of
almost 2 to 1 on both the New York Stock Exchange and the
Nasdaq.

Growth Stocks

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

US STOCKS-Wall St finishes flat after late rebound