* Portuguese, Italian markets slide, weigh on Europe
* Utilities, telecoms up; 10-yr yield hits lowest since June
* Lumber Liquidators tumbles after revised outlook
* Dow off 0.4 pct; S&P 500 down 0.4 pct; Nasdaq off 0.4 pct
(Updates to midday)
By Rodrigo Campos
NEW YORK, July 10 U.S. stocks pulled well off
session lows but were still falling on Thursday as concerns
about the financial health of Portugal's top listed bank gave
investors a reason to cash in recent gains.
With the Dow and the S&P 500 near record highs, the slide in
Europe triggered by financial shares quickly translated into
broad selling on Wall Street. The S&P 500 briefly lost 1
percent, a daily drop the benchmark has not seen since April 10.
Espirito Santo Financial Group, the largest
shareholder in Portugal's Banco Espirito Santo,
suspended trading in its shares and bonds, citing "material
difficulties" at parent company ESI. The bank's shares tumbled
17.2 percent. The S&P 500 financial sector index fell
Portugal's benchmark stock index fell 4.2 percent
and Italy's FTSE MIB slid 1.9 percent. An index of
European bank shares dropped 1.7 percent after earlier
falling as much as 3.1 percent.
The Dow Jones industrial average fell 71.67 points or
0.42 percent, to 16,913.94. The S&P 500 lost 6.86 points
or 0.35 percent, to 1,965.97. The Nasdaq Composite
dropped 15.84 points or 0.36 percent, to 4,403.20.
"In a world of global news, you can always find something
that is not doing well, whether it is political events in Iraq
or banking in Portugal," said Rick Meckler, president of
investment firm LibertyView Capital Management in Jersey City,
"The real test will be the earnings and that will either
give confidence to people to come back in or make them realize
the prices they have been paying are just too high."
Some investors in Lumber Liquidators thought they
were paying too much. Shares plunged 21.7 percent to $55.17
after the hardwood flooring retailer cut its earnings outlook.
Sandwich chain Potbelly Corp estimated
second-quarter revenue and profit below analysts' expectations
and its stock plummeted 22.9 percent to $11.29.
Shares of Crumbs Bake Shop Inc rose more than
tenfold after CNBC reported that a group including the Fischer
family and Marcus Lemonis, an executive who stars on the CNBC
show "The Profit," is ready to provide financing for the
struggling chain of cupcake shops as a prelude to an
acquisition. Earlier this week, Lemonis tweeted links to news
stories on Crumbs' demise followed by the words "not so fast."
Crumbs shares shot up 1,200 percent to 40 cents.
Declining issues outnumbered advancing ones on the New York
Stock Exchange by 2,103 to 860, for a 2.45-to-1 ratio on the
downside. On the Nasdaq, 1,992 issues fell and 628 rose for a
3.17-to-1 ratio favoring decliners.
The S&P utilities index and the S&P telecom index
, defensive plays favored for their relatively high
dividends, rose as the yield on the 10-year U.S. Treasury note
briefly dropped to its lowest since June 2.
The CBOE Volatility Index hit its highest since May
20 before paring gains. A week ago, the VIX hit 10.28, its
lowest level since early 2007. At midday on Thursday, the VIX
was up 5.9 percent at 12.34.
Earlier in the session, futures held on to steep losses
after data showed filings for new U.S. unemployment benefit
claims fell last week to one of the lowest levels since before
the 2007-09 recession.
In other data, U.S. wholesale inventories rose in May,
reinforcing the view that economic growth should surge in the
second quarter following a weak start to the year.
(Reporting by Rodrigo Campos; Additional reporting by Chuck
Mikolajczak; Editing by Bernadette Baum, Nick Zieminski and Jan