Stocks Lower in Midday Trade 09/02 12:21
U.S. stocks were mostly lower in early afternoon trading Tuesday even after
news that the economy was gaining strength. The S&P 500 dipped back below 2,000
points as oil producers weighed the index down.
NEW YORK (AP) -- U.S. stocks were mostly lower in early afternoon trading
Tuesday even after news that the economy was gaining strength. The S&P 500
dipped back below 2,000 points as oil producers weighed the index down.
Investors looked ahead to major events later this week. The European Central
Bank holds a meeting on Thursday, and a key U.S. jobs report comes out Friday.
KEEPING SCORE: The Dow Jones industrial average slipped 41 points, or 0.2
percent, to 17,057 as of 12 p.m. Eastern time. The Standard & Poor's 500 index
dipped four points, or 0.2 percent, to 1,999. The Nasdaq rose four points, or
0.1 percent, to 4,583.
ECONOMY: Two reports out Tuesday offered encouraging signs of U.S. economic
growth. The Institute for Supply Management, a trade group, said its gauge of
manufacturing reached 59 in August, the highest level since March 2011, buoyed
by new orders for goods and increased production. Separately, the Commerce
Department said that construction spending surged 1.8 percent in July, the
biggest increase in more than 2 years.
REACTION: "It's clear we have a very solid economic expansion, but the stock
market isn't buzzing much at all," said Anastasia Amoroso, Global Market
Strategist at J.P. Morgan Funds. The explanation, she said, is that signs of
solid growth raise the odds that the Federal Reserve will move to lift
short-term interest rates. Rate increases typically slow stock markets down.
"We're moving closer and closer to higher rates," Amoroso said, "so strong
economic momentum could actually put a damper on the market."
MORE TO COME: Traders will be focusing on the U.S. employment report for
August due Friday. Investor confidence over the U.S. economy has risen
following several months of strong growth in hiring and corporate profits and a
series of major corporate acquisitions.
OIL: The price of crude oil slumped, pulling down shares of oil and gas
companies. U.S. benchmark crude fell $1.86 at $94.10 a barrel in New York.
Energy companies were the biggest losers among the 10 sectors in the S&P 500
CRUISE-SHIP DEAL: Norwegian Cruise Line Holdings jumped 12 percent on the
news that it had agreed to buy Prestige Cruises International for $3 billion.
Buying Prestige will help Norwegian compete with its larger rivals: Carnival
Corp. and Royal Caribbean Cruises. Norwegian Cruise Line's stock gained $3.89
DRUG STRUGGLES: Exelixis lost more than half its value following news that
the drug developer's potential treatment for prostate cancer fell short in
late-stage research. The company's stock plunged $2.22, or 53 percent, to $1.95
BONDS: U.S. government bond prices dropped Tuesday, pushing up long-term
interest rates. The yield on the 10-year note climbed to 2.40 percent, up from
2.35 percent late Friday.
EUROPE: Major markets across Europe were mixed. Germany's DAX rose 0.3
percent, and the CAC-40 in France dipped 0.1 percent. Britain's FTSE 100 was
ASIA: Japan's Nikkei 225 gained 1.2 percent, while China's Shanghai
Composite jumped 1.4 percent. Hong Kong's Hang Seng eked out a gain of 0.1
DOLLAR RIDES, EURO SLIDES: The euro continued its summer slide, hitting a
one-year low against the U.S. currency around $1.3110. Recent economic reports
have shown the eurozone's economy slowing to a crawl, and that has weighed on
the currency. The dollar also gained against the yen, rising to 104.88 yen from
104.35 yen late Monday.
CHINA CHILL: Indicators such as power generation, steel output and property
sales point to continued weakness in the world's No. 2 economy, raising
expectations that the Chinese government will take steps to support growth.
WHAT'S NEXT: "We still expect China's overall economy to cool toward the
year's end, and to stay weak through 2015," said Wang Tao, an economist at UBS
in Hong Kong.