US stocks dip at close despite rosy OECD forecast

AFP - US stocks reversed strong gains to close lower Wednesday as investors fretted over the decline of the euro and a mounting European debt crisis.

The Dow Jones Industrial Average ended the day down 69.30 points (0.69 percent) lower to 9,974.45 -- the first time the blue-chip index closed below the sensitive 10,000 level since February 8.

Sentiment turned negative in the last hour of trade after a day-long surge. The Dow was up 135 points at one stage thanks to a positive OECD report that raised the growth forecast and other upbeat US economic data.

The tech-rich Nasdaq index fell 15.07 points (0.68 percent) at 2,195.88 while the broad-based S&P 500 slipped 6.08 points (0.57 percent) to 1,067.95.

"The market is tracking the euro, the euro is still the problem," said Marc Pado, market strategist at Cantor Fitzgerald & Co. as the single European currency fell close to four-year lows against the dollar.

"The strength of that dollar index hurts the outlook for trade for the large cap multinationals," Pado said. "We are still watching the euro as a proxy for the whole situation in Europe."

German Chancellor Angela Merkel said Wednesday her country would push "with all our strength" for a strong euro, saying Germany had been a prime beneficiary of the single European currency.

The bearish sentiment on the euro overshowed the positive news that fueled stock buying early Wednesday.

The OECD's six-monthly review upgraded Wednesday the global growth forecast for this year to about 4.75 percent after a shrinkage of 0.9 percent in 2009.

Fresh government data also showed the US recovery firming up, with an unexpected rise in sales of new homes and new orders for big-ticket US manufactured goods in April.

New orders for manufactured durable goods -- items such as planes, cars, refrigerators and computers that could last at least three years -- increased 2.9 percent to 193.9 billion dollars, the Commerce Department said in a report.

This was the fourth increase in the last five months and followed a revised flat reading in March. Most economists had expected a 1.5 percent rise in April.

Adding to the positive sentiment was data showing sales of newly constructed single-family homes soaring 14.8 percent in April, well beyond market expectations.

Analysts had expected sales of around 425,000, versus the whopping 504,000 posted.