US stocks down as Shanghai sinks, Greece deadline looms

Friday, May 22, 2015, Vol. 39, No. 21

NEW YORK (AP) — U.S. stocks were modestly lower in midday trading Thursday, following a steep sell-off in the Chinese stock market and the approaching deadline for cash-starved Greece to make a debt payment.

KEEPING SCORE: The Dow Jones industrial average lost 77 points, or 0.4 percent, to 18,085 as of 12:15 p.m. Eastern. The Standard & Poor's 500 index lost eight points, or 0.4 percent, to 2,115 and the Nasdaq composite lost 16 points, or 0.3 percent, to 5,090.

MORE M&A: Chipmakers Avago Technologies and Broadcom agreed to merge in a $37 billion deal. Avago was down 87 cents, or 1 percent, to $140.64. Broadcom was down $1.51, or 3 percent, to $55.65. However both of those stocks jumped sharply Wednesday -- Broadcom by 22 percent and Avago by 8 percent -- on rumors those companies were in merger talks.

CHINA DIVE: The Shanghai Composite sank 6.5 percent in another volatile move. Stock market commentator Hexun attributed the fall to several factors including brokerages tightening margin lending, selling by speculators and a Chinese sovereign wealth fund selling shares in two state banks.

Despite a deepening economic slowdown, the index has gained 40 percent in the past three months alone. Chinese leaders have tried to tap brakes on the stock market boom, fearing it could run out of control and disrupt economic reform plans.

GREECE FACTOR: Traders continue to get mixed messages about the progress of talks between Greece and its creditors. Greece said Wednesday it expected to reach a deal to get more bailout loans in time for it to make a key debt repayment on June 5. But its creditors, however, were quick to temper expectations.

Greece says it aims to clinch a deal with its creditors by Sunday, a development that would allow it to receive the desperately needed final installment of its international bailout plan and avoid a default.

Greek stocks were down 1.7 percent. Germany's DAX lost 1.2 percent, France's CAC-40 lost 1.5 percent and the U.K.'s FTSE 100 index was down 0.3 percent.

THE QUOTE: "With the situation in Greece rapidly coming to a head and election results showing disenchantment with the status quo and the establishment across the continent, the pressure to reach a solution on Greece has grown rapidly," said Nicholas Teo, analyst with CMC in Singapore, in a market commentary. "Developments on this front may continue to drive trading action in the coming days."

ENERGY: Benchmark U.S. crude fell 27 cents to $57.26 a barrel on the New York Mercantile Exchange.

BONDS, CURRENCIES: U.S. government bond prices didn't move much. The yield on the 10-year Treasury note held steady at 2.14 percent. The euro rose to $1.0914 from $1.0899. The dollar rose to 124.23 yen from 123.75 yen.