Stocks rise early after Greek deal, then flatten

NEW YORK — The stock market finally got the deal it wanted from Greece, but the excitement didn't last long.

U.S. stocks rose early Thursday after Greece announced an agreement to cut costs and keep from defaulting on its debt next month, an event that could have shocked the world financial system.

But stocks dropped back and were mostly flat at midday. Analysts said the market had expected the deal and warned that Europe still faced problems.

The Dow Jones industrial average pushed to within 75 points of 13,000, a milestone it hasn't reached in almost four years. It had given up some of those gains by shortly after noon, when it was up 23 points to 12,907.

The Standard & Poor's 500 index briefly rose four points to 1,353, double its lowest close during the Great Recession. At midday it was just shy of that landmark, at 1,352. The Nasdaq composite index was up nine points to 2,925.

Jeremy Zirin, chief equity strategist at UBS Wealth Management, said that the markets had already assumed Greece would reach a deal to keep from defaulting, which is why stocks didn't skyrocket on the news.

The deal calls for Greece to make steep cuts in government jobs and spending. Greece's so-called troika of lenders — the European Union, the European Central Bank and the International Monetary Fund — insisted on the cuts.

The cuts are one condition of a €130 billion bailout for Greece, without which it can't afford €14.5 billion worth of bond payments due March 20.

But the cuts will be hard to implement in a country that has grown used to profligate government spending. Workers are already protesting that job cuts and pay cuts have already been too severe.

The country has missed other targets for reducing its debts. It also still has to persuade private investors to agree to losses on their holdings, which will make them less likely to buy Greek bonds in the future.

And other European countries, notably Portugal and Italy, still have long-term debt that economists warn could be unsustainable.

"We still have a lot of wood to chop," Zirin said.

Nigel Travis, CEO of Dunkin' Brands, said the news out of Greece will be a psychological boost for consumers. And when they feel good about the economy, they're more likely to spend, regardless of whether their wealth is directly affected.