* Investors digest yuan move, retailers down on cost fears
* Markets seen overstretched on technicals
* Biovail to buy Valeant, shares rise
* Indexes down: Dow 0.1 pct, S&P 0.4 pct, Nasdaq 0.9 pct
* For up-to-the-minute market news see []
(Updates to the close)
By Ryan Vlastelica
NEW YORK, June 21 (Reuters) - U.S. stocks once again
succumbed to late-day selling in light trading on Monday as
hopes China's newfound dedication to yuan flexibility turned to
doubts about the speed and magnitude of Beijing's intentions.
The market's overall bearish tone eroded the initial
optimism around the benefits of the yuan move. Stocks pulled
back as investors questioned the effectiveness of what is
expected to be a gradual change.
"The announcement was considered to be constructive, but
markets were unable to sustain that euphoria as they looked at
the details," said John Brady, senior vice president at MF
Global in Chicago.
The S&P 500 briefly broke above 1,130, the midpoint between
its 2010 high and low and a key technical mark but was unable
to hold the level, adding to the negative sentiment. The index
had risen more than 8 percent over the past ten trading days.
While support for China's decision faded, pessimism that
the plan would lead to higher costs on imports from China
weighed on retailers. Dow component Wal-Mart Stores Inc <WMT.N>
fell 1 percent to $51.02. The S&P retail index <.RLX> shed 1.7
percent.
"It seems everything in the low-cost retailers is made in
China," said Brian Gendreau, market strategist affiliated with
Financial Network Investment Corporation in El Segundo,
California.
The Dow Jones industrial average <> fell 8.23 points,
or 0.08 percent, at 10,442.41. The Standard & Poor's 500 Index
<.SPX> was down 4.30 points, or 0.38 percent, at 1,113.21. The
Nasdaq Composite Index <> was down 20.71 points, or 0.90
percent, at 2,289.09.
Losses were extended on Nasdaq on weakness in large-cap
tech stocks. Amazon.com Inc <AMZN.O> fell 2.6 percent to
$122.55 after it cut the price of its Kindle e-reader product
to $189 from $259. Google Inc <GOOG.O> lost 2.3 percent to
$488.56 and Dow component Microsoft Corp <MSFT.O> was down 1.9
percent to $25.95.
Markets opened higher, with the Dow soaring 140 points, as
investors said China's move could lift the profit outlook for
multinationals. Freeport-McMoRan Copper & Gold Inc <FCX.N>
jumped 3.3 percent to $68.09. Dow component Alcoa Inc <AA.N>
climbed 5.5 percent to $11.72. For a factbox on companies and
China exposure see [].
"This move is going to be good for global markets in the
long-term and help the bottom lines of companies with Chinese
exposure," said Channing Smith, vice president of Capital
Advisors in Tulsa, Oklahoma. "However, markets have had a good
run and investors haven't forgotten that we face headwinds with
Europe and the labor market."
In deal news, Biovail Corp <BVF.N> agreed to buy Valeant
Pharmaceuticals International <VRX.N> in a complex deal worth
roughly $3.3 billion. Biovail gained 14 percent to $16.67 on
the New York Stock Exchange while Valeant was up 2.3 percent to
$46.90. []
BP's <BP.L><BP.N> U.S.-listed shares slid 4.5 percent to
$30.23 after an internal BP document estimated that a
worst-case scenario for the Gulf of Mexico oil spill could be
about 100,000 barrels per day. []
About 7.98 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, well below
last year's estimated daily average of 9.65 billion.
Declining stocks outnumbered advancing ones on the NYSE by
a ratio of about 18 to 13, while on the Nasdaq more than two
stocks fell for every one that rose.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Main yuan coverage []
Winners and losers from a firmer yuan []
Yuan NDFs react to political events
http://link.reuters.com/muw23m
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(Reporting by Ryan Vlastelica; Additional reporting by Matthew
Lynley; Editing by Kenneth Barry)
