On Wall Street, rally stalls

Associated Press

NEW YORK

The first week of July is off to a much slower start than the last week of June, when stocks had their biggest gains in two years.

Major indexes were mixed for much of the day Tuesday but dipped in afternoon trading after Moody’s downgraded Portugal’s debt to “junk.”

The credit ratings agency cited concerns that Portugal will not be able to meet targets to reduce its deficit due to the “formidable challenges” the country is facing in cutting spending.

The Dow Jones industrial average fell 12.90, or 0.1 percent, to close at 12,569.87. The Dow had risen as many as 19 points in morning trading after the Commerce Department reported an increase in orders for manufactured goods.

Bond prices rose, sending their yields lower, as investors sought out the relative safety of Treasurys.

The yield on the 10-year Treasury note fell to 3.12 percent from 3.19 percent late Friday.

Investors are worried that Europe’s debt problems could slow the global economy and cause a crisis for European banks.

Trading volume was light as many traders took vacations. U.S. markets were closed Monday for the July 4th holiday.

Many investors are looking to next week, when aluminum maker Alcoa Inc. becomes the first major U.S. company to report financial results.