Stocks end little changed after investors track gyrations of euro; Dow posts gain of 6 points

Dow recovers from 184-point drop to edge higher

NEW YORK — Stocks have ended an erratic session little changed after investors spent the day tracking the euro’s moves against the dollar.

A drop and subsequent rebound in the euro Monday has steered the Dow Jones industrial average from a loss of 184 points at midday to a gain of about 6 points by the close. The euro has been sliding on concerns that debt problems will undermine Europe’s economic recovery.

Stocks recovered in afternoon trading after the euro stabilized.

The Dow is up 6 at 10,623. The Standard & Poor’s 500 index is up 1 at 1,137. The Nasdaq composite index is up 7 at 2,354.

Three stocks fell for every two that rose on New York Stock Exchange. Volume totaled 1.4 billion shares compared with 1.5 billion Friday.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Stocks slid for a third day Monday on still growing concerns that Europe’s debt problems will undermine the economic recovery in the U.S.

The Dow Jones industrial average fell about 75 points in late afternoon trading after being down as much as 184 points. It has fallen seven of the last nine days.

The rebound in stocks traced a move higher in the euro.

Stocks and other assets seen as risky are getting hit because traders have so many unanswered questions about how Europe will pull itself from its financial mess without hurting its recovery. Because economies around the world are dependent on one another, the broader concern is that Europe’s problems will halt a rebound in the U.S. and also in Asia.

The move to safety drove the dollar higher. The euro, which is used by 16 countries in Europe, fell to a four-year low before recovering. The spike in the dollar, in turn, hit prices for commodities such as oil.

Oil at times traded below $70 a barrel for the first time since February. Oil is priced in dollars so a stronger dollar deters investment in oil. Crude oil fell $1.38 to $70.23 per barrel on the New York Mercantile Exchange.

The ICE Futures US dollar index, which measures the dollar against a basket of six currencies, rose 0.2 percent. The euro fell to as low as $1.2237 early Monday before moving higher. The plunging euro has been driving trading around the globe in recent days.

Energy stocks, which make up about 10 percent of the S&P 500 index, led the market lower as the price of oil fell. Financial stocks, which account for 16 percent of the index, also slid.

Shares of consumer staples companies, which are seen as safer bets in weak economies, managed small gains.

Peabody Energy Corp. fell 4.9 percent, while Citigroup Inc. fell 3.3 percent. Procter & Gamble Co., which makes Tide detergent and Gillette razors, rose 1.2 percent.

Investors are questioning whether steep budget cuts in countries including Greece, Spain and Portugal will hinder an economic recovery in Europe and in turn, the U.S. Traders are also concerned that loan defaults could ripple through to banks in stronger countries like Germany and France. The fear is that the world banking system could see a replay of the losses that hobbled financial institutions in late 2008.

The austerity measures are required under a nearly $1 trillion bailout program the European Union and International Monetary Fund agreed to last week. The rescue package provides access to cheap loans for European countries facing mounting debt problems.

Traders are betting that U.S. export growth will continue to slow as Europeans, unnerved by problems at home, show less of an appetite to buy American goods. And if Americans get nervous and spend less on imports that could further curtail the global recovery.

“We need to quantify how much Europe can hurt us,” said Philip Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. He said it could take a month or two before investors have a better sense of whether the debt problems in Europe will spread.

During that time, the market is likely to see more of the volatility and big swings that have marked trading over the past two weeks.

In the final hour of trading, the Dow fell 74.07, or 0.7 percent, to 10,546.09. The Standard & Poor’s 500 index fell 5.62, or 0.5 percent, to 1,130.06, while the Nasdaq composite index fell 7.51, or 0.3 percent, to 2,339.34.

More than two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1 billion shares, compared with 1 billion traded at the same point Friday.

Stocks remained volatile last week as investors first cheered the European bailout program before becoming skittish about how it would affect the continent’s economy. The Dow fell 114 points on Thursday and 163 points Friday after the euro fell.

Bond prices were mixed Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 3.46 percent from late Friday.

Gold fell 50 cents to $1,227.30 an ounce.

Europe’s debt crisis poses risks to the U.S. financial system because it could make loans even harder to come by in the United States and push up the rates on them. European banks own bonds of over-extended governments at the heart of the crisis. And, there’s fears that those banks could suffer heavy losses — or worse collapse — if they don’t get repaid. If that happens, U.S. banks that lend to those European banks would suffer losses, too. That would make U.S. banks cut back on lending, which would hurt the economic recovery.

Fears about such losses makes lending more risky. That’s prompting banks and other investors to demand a higher return when they lend out money to one another — as well as to some businesses and people — on a short-term basis. That’s why an interest rate called the LIBOR is rising. That rate is used to peg many adjustable rate mortgages and business loans in the United States.

Analysts say that even a loss in confidence could make it harder for the U.S. economy to bounce back.

“In all likelihood our recovery is going to continue but it will be at a slower pace than we imagined a month ago,” said Howard Ward, chief investment officer of the GAMCO Growth Fund.

A disappointing report on regional manufacturing from the New York Federal Reserve weighed on sentiment. The Empire State manufacturing index fell to 19.11 this month from 31.86 in April. Economists polled by Thomson Reuters, on average, had forecast a reading of 30.

A forecast from home-improvement retailer Lowe’s Cos. also fell short of expectations. The stock fell 92 cents, or 3.5 percent, to $25.15.

Meanwhile, Universal Health Services Inc. agreed to buy Psychiatric Solutions Inc. for about $2 billion in cash. Japan’s second largest drug maker, Astellas Pharma Inc. agreed to purchase U.S. cancer drug company OSI Pharmaceuticals Inc. for $4 billion in cash.

Traders see dealmaking as a sign of economic recovery because it means businesses are more comfortable spending reserves to expand their operations.

Universal Health rose $3, or 7.7 percent, to $42.04 and Psychiatric Solutions fell 22 cents, or 0.7 percent, to $32.41.

Among stocks, Peabody Energy fell $2.45 to $60.46, while Citigroup fell 13 cents to $3.85. Procter & Gamble rose 72 cents to $63.26.

The Russell 2000 index of smaller companies fell 4.00, or 0.6 percent, to 689.98.

Britain’s FTSE 100 fell 0.1 percent, Germany’s DAX index gained 0.1 percent, and France’s CAC-40 fell 0.5 percent. Japan’s Nikkei stock average fell 2.2 percent.

In China, the benchmark index in Shanghai fell 5.1 percent to a one-year low on concern that the government will curb lending to slow the economy. There also was concern about the problems in Europe.

AP Economics Writer Jeannine Aversa contributed to this story from Washington.