Stocks pull back as euro zone fears weigh

By msnbc.com news services

Stocks pulled back Friday, as investors erred on the side of caution ahead of a weekend expected to bring new developments in dealing with Spain's banking crisis.

Spain is expected to request European aid for its ailing banks over the weekend to forestall worsening market turmoil, EU and German sources said. Investors are worried that developments may not be favorable for markets.

"The European banking system is undercapitalized, and the markets are waxing and waning based on enthusiasm for a plan to recapitalize them," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

"This weekend we may get some news on recapitalizing Spanish banks, and I think there is a fair amount of fear of being invested in risk assets over the weekend, because if that doesn't happen, we could easily lose that 200-plus (Dow index) points that we gained."

President Barack Obama is expected to talk about the nation's economic woes in remarks at the White House later Friday.

The White House says the president will address the state of the economy, including the debt crisis in Europe that continues to be a drag on the U.S. The president will also call on Congress to pass proposals that he says would put construction workers, teachers and first responders back to work.

Obama's statement in the White House briefing room comes in the midst of a rough patch for the president and his re-election campaign.

A dismal jobs report last week has raised new fears that the nation's economic recovery has slowed. And Obama's campaign raised less money last month than Republican rival Mitt Romney.

The S&P 500 was on course for its best week this year after a substantial rally in the middle of the week. That came shortly after the index fell below it 200-day moving average, in what some analysts said was an oversold bounce. The strong week also comes after the worst month since September.

"The rally we had, which was pretty strong, was a bit more of a technical than a fundamental bounce, and the market is struggling to find the good news to keep it going," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

McDonald's Corp fell after the fast-food chain said global comparable sales rose 3.3 percent in May and that foreign currency translation negatively impacted second quarter earnings by 7 to 9 cents per share.

Chesapeake Energy Corp plans to sell its pipeline and related assets to Global Infrastructure Partners in three separate transactions worth more than $4 billion, as the company scrambles to plug an estimated $10 billion funding shortfall.

An Apple Inc lawyer said the iPhone and iPad maker may seek a legal order stopping the launch of Samsung Electronics Co Ltd's Galaxy S III phone in the United States later this month.

Best Buy Co Inc founder and chairman, Richard Schulze, resigned from the retailer's board on Thursday and said he was exploring options for his 20.1 percent ownership stake, a move seen as a possible precursor of a Schulze-led private takeover.

Reuters contributed to this report.

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