Stocks seesaw in volatile trade

By Alexandra Twin, senior writer


NEW YORK(CNNMoney.com) -- Stocks seesawed Tuesday, losing steam late in a volatile session, as investors welcomed Europe's $1 trillion aid package, but showed caution amid the recent market turmoil.

The Dow Jones industrial average (INDU) lost 35 points, or 0.3%, after having been down nearly 100 points and then up 89 points earlier in the session. The S&P 500 index (SPX) lost 4 points, or 0.3% and the Nasdaq composite (COMP) was little changed.

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Stocks lost steam in the last hour of trade as investors, cautious after Monday's huge rally, continued to digest the European aid package.

However, the worries of the last few weeks pushed investors into safe-haven areas such as the U.S. dollar and gold. COMEX gold for June delivery settled at a record high of $1,220.30, up $19.50 an ounce.

U.S. stocks rose Monday, joining stocks around the globe, after European leaders approved an almost $1 trillion rescue package aimed at containing the growing debt crisis and stabilizing the euro. The Dow gained 405 points, its biggest gain since March 23, 2009.

But the euphoria of Monday gave way to a more measured response Tuesday amid questions about whether the bailout package will work if Greece and other debt-plagued nations don't make other efforts to cut their growing deficits. Markets around the world slipped after also rallying Monday.

Stocks have become increasingly volatile over the last few weeks as the period of markets gently moving higher has given way to bigger intraday swings.

"Looking ahead, its not clear we're out of the woods yet," said Michael Sheldon, chief market strategist at RDM Financial Group. "We could be in a short-term trading range as investors adjust to a period of increased volatility."

The CBOE Volatility index, or the VIX (VIX), Wall Street's fear gauge, slipped 2% in choppy trading, reflecting the mixed market. On Monday, the VIX slipped around 30%, reflecting a lessening of worries following last week's selloff.

During last week's sell off, culminating in the one-two punch of Thursday's "flash crash" and Friday's follow-up, the VIX rallied to 13-month highs as investors grew more panicky.

After the close of trade Tuesday, Walt Disney (DIS, Fortune 500) reported quarterly earnings and revenues that topped expectations.

After the crash: The House Financial Services Subcommittee on Capital Markets was discussing last Thursday's stock market roller-coaster ride, in which a 350-point loss on the Dow became a nearly 1,000-point loss in under 10 minutes. The Dow erased two-thirds of that loss by the close, but investors remained rattled. The intraday selloff was the biggest on a point basis in market history.

Executives from the nation's largest stock exchanges and the chairwoman of the SEC were expected to tell Congress that the ultimate cause of the crash remains a mystery.

SEC chairwoman Mary Schapiro said regulators need more time to figure out what exactly happened. She said they had ruled out computer hacking, a terrorist attack or any malicious intent having driven the selling.

In addition, regulators and exchanges have reportedly firmed up plans to institute "circuit breakers" on individual stocks in an attempt to prevent a repeat of last week's incident.

Greece: Greece requested $18.4 billion in funds Tuesday from the European Union (EU) and is due to receive $7 billion from the International Monetary Fund (IMF) Wednesday. In total, the nation is requesting access to around $25 billion of the over $140 billion the EU and IMF have pledged in support.

The funds mean Greece will be able to meet the May 19 deadline to pay back roughly $11 billion in debt.

However, the pledge of over $140 billion came with requirements that Greece implement more rigid austerity measures that have angered unions and caused rioting.

Worries that Greece's problems would hurt other struggling nations such as Portugal have created fears that a broad European debt crisis could cripple the burgeoning economic recovery.

Economy: Wholesale inventories rose 0.4% in March, the Commerce Department reported, after climbing 0.6% in February. Economists thought inventories would increase by 0.5%.

World markets: Stocks around the globe were mostly lower. In Europe, Germany's DAX gained 0.3% after rising over 5% Monday, but other major markets fell. France's CAC 40 lost 0.7%, after gaining almost 10% on Monday. Britain's FTSE lost 1% after gaining over 5% Monday.

Asian markets fell, with Japan's Nikkei losing 1.1% and Hong Kong's Hang Seng falling 1.7%.

Dollar and commodities: The dollar was barely changed versus the euro. On Monday, the euro bounced versus the dollar after hitting 14-month lows against the U.S. currency during last week's big stock selloff. The dollar was barely changed versus the yen.

U.S. light crude oil for June delivery settled down 43 cents to $76.37 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices fell, pushing the yield on the 10-year note to 3.56% from 3.54% late Monday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers eight to seven on volume of 1.46 billion shares. On the Nasdaq, advancers beat decliners eight to five on volume of 2.49 billion shares.  To top of page

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