Stocks decline as investors weigh economic reports

U.S. stocks fell Tuesday as better-than-expected reports on the U.S. service sector and factor orders had investors weighing economic growth against an eventual rise in interest rates.

Target slid after the discount retailer cut its second-quarter profit outlook. Coach gained after the luxury retailer tallied better-than-expected quarterly revenue; Gannett Co rose after the publisher of USA Today said it would spin off its publishing assets to focus on its online businesses.

Read More Early movers: COH, CVS, ADM, AIG, TM, SHLD & more

The Institute for Supply Management’s service index climbed to 58.7 in July for its highest reading since December 2005, while a separate survey found orders for U.S. factory goods rising 1.1 percent in June.

The data showed “continued strength in the overall economy, and people are reading it as the Fed is going to raise rates soon, that is part of what has markets in a funk right now,” said Paul Nolte, senior vice president and portfolio manager at Kingsview Asset management.

“Encouragingly the second-quarter economic rebound after the first-quarter contraction is continuing at a good pace in the third quarter. While of course something to root for, it again brings the policy of the Federal Reserve front and center and that is why good economic news is not translating into better stock market performance,” emailed Peter Boockvar, chief market analyst at the Lindsey Group.

DJIA Dow Jones Industrial Average 16502.07
-67.21 -0.41%
S&P 500 S&P 500 Index 1931.19
-7.80 -0.40%
NASDAQ Nasdaq Composite Index 4372.90
-10.99 -0.25%

After a 95-point drop, the Dow Jones Industrial Average was lately off 66.04 points, or 0.4 percent, at 16,502.24, with Intel leading blue-chip losses that included 23 of 30 components.

The S&P 500 lost 7.42 points, or 0.4 percent, to 1,931.57, with energy the worst performing and industrials faring best among its 10 main sectors.

The Nasdaq dropped 11.26 points, or 0.3 percent, to 4,372.63.

The CBOE volatility Index rose 3 percent to 15.57.

For every two shares rising, roughly three fell on the New York Stock Exchange, where 176 million shares exchanged hands by 11 a.m. Eastern. Composite volume neared 878 million.

On the New York Mercantile Exchange, crude futures shed 52 cents, or 0.5 percent, to $97.77 a barrel; gold futures dropped $3.00, or 0.2 percent, to $1,285.90 an ounce.

The U.S. dollar advanced against other global currencies and the 10-year Treasury yield rose 3 basis points to 2.517 percent.

Getty Images Traders work on the floor of the New York Stock Exchange in New York.

Getty Images
Traders work on the floor of the New York Stock Exchange in New York.

Economic data from outside the United States Tuesday had China’s services purchasing managers’ index dropping to 50.0 in July from 53.1 in June, with the disappointing report somewhat countered by separate numbers showing expansion in the euro-zone’s service sector.

“We had some economic news out of Europe this morning that was not that bad, and then the Chinese service index actually receded, so mixed economic activity abroad,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

“The market is probably going to look at the economic numbers, since the geopolitical factors this morning reflect less of a concern, as the truce in Gaza is under way; that gives investors more reason to focus on the economy,” said Cardillo.

Read More Tuesday could show that bulls are back in business

On Monday, stocks climbed, with the S&P 500 bouncing back from its biggest weekly hit since 2012, as companies including Berkshire Hathaway reported results.

Read More US stocks end higher; Dow halts 4-day loss streak

This entry was posted in Markets. Bookmark the permalink.

Leave a Reply