US stocks waver; euro dives on Greece turmoil

Stronger news about the U.S. economy stilled the ripples from Europe's latest political impasse Tuesday, pushing U.S. stocks between modest gains and losses.

The euro and European stocks plunged as trading in New York began after efforts to form a government in Greece collapsed. Newly-elected political leaders there disagree about whether to accept more international bailouts and continue with painful spending cuts.

In the U.S., stocks opened mixed then edged into small gains after word that confidence among U.S. builders rose to a five-year high in May. The index has risen for seven of the past eight months.

Homebuilders rallied. KB Home and Lennar Corp. rose 4 per cent, Hovnanian Enterprises 5 per cent.

Earlier, a survey by the New York Fed found that manufacturing activity in the New York region rebounded this month far more strongly than economists had expected.

The early rise deflated, but stocks had returned to daily highs shortly before noon. The Dow Jones industrial average rose 42 points to 12,737. It was lifted by JPMorgan Chase and Bank of America, shaking off recent losses related to a surprise $2 billion trading loss that JPMorgan announced last week.

The Standard & Poor's 500 index rose four to 1,342. The Nasdaq composite index rose 21 to 2,923.

Stocks are having their worst month in the past eight. For the month, the Dow is down 518 points — about 4 per cent — after hitting a four-year high on May 1. The average is on track to post its first monthly loss since September, when it fell 6 per cent.

If the Dow closes higher, it will be only its second up day since the peak reached on May 1.

The euro fell as low as $1.2752, a four-month low against the dollar, after Greek socialist leader Evangelos Venizelos declared that attempts to form a governing coalition there had failed and new elections will be held next month. If voters elect parties opposed to the terms of the country's financial rescue, Greece could be expelled from the euro and global markets would likely shudder.

Stock indexes in France, Britain and Germany gave up earlier gains after Venizelos' remarks and closed sharply lower.

Home Depot slumped 2 per cent, the most of the 30 companies in the Dow, after the world's biggest home-improvement company forecast revenue that was below what Wall Street analysts were expecting.

Among other stocks making big moves:

— TJX Cos., which owns the T.J. Maxx, Marshalls and HomeGoods store chains, shot up 7 per cent, the most in the S&P 500 index. The discount retailer reported a 58 per cent surge in first-quarter income and raised its full-year profit forecast.

— Avon Products Inc. fell 10 per cent, the most in the S&P 500 index, after Coty Inc. canceled its unsolicited, $10.7 billion bid for the cosmetics retailer.

— Groupon leapt 16 per cent after the online daily discount site reported first-quarter revenue that exceeded analysts' expectations.