U.S. stocks traded lower on Tuesday as investors eyed renewed strength in the U.S. dollar and mixed data following the Memorial Day holiday. (Tweet This)
“I think the pressure today is coming from the stronger dollar,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “The focus this week is the yield curve and the stronger dollar.”
The Dow Jones industrial average traded about 200 points lower after falling more than 100 points soon after the open.
Markit’s Purchasing Managers Index for the services sectors fell for a third straight month in May to 56.4 from April’s final read of 57.4.
Before the bell, durable goods for April showed a decline of 0.5 percent, roughly in-line with expectations. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.0 percent last month after an upwardly revised 1.5 percent increase in March.
Futures held lower after the report. The U.S. 2-year Treasury yield jumped to 0.64 percent, while the 10-year edged higher to 2.20 percent.
The U.S. dollar continued to strengthen, up more than 1 percent on the day and reaching its highest level against the yen since July 2007. The euro dipped below $1.09 for the first time since April 28.
HPM Partners Chief Investment Officer Ben Pace is bullish on the dollar and said the greenback’s strength finds support from slight improvement in U.S. economic data and expectations of central bank tightening.
Housing data showed improvement. New home sales for April showed an increase of 6.8 percent to a seasonally adjusted annual rate of 517,000, up from the consensus 510,000.
The S&P/Case-Shiller composite index of 20 metropolitan areas gained 5 percent in March on a year-over-year basis, matching February’s gain. The March reading topped a Reuters poll of economists that forecast a rise of 4.7 percent.
The Conference Board Consumer Confidence report was 95.4 in May, above the revised April read of 94.3.
The Dallas Manufacturing Index came in at negative 20.8 for May, below expectations and down from last month’s read of negative 16 in April.
U.S. markets were closed on Monday for Memorial Day. Markets in Germany, France and the U.K. were also closed for other holidays.
Investors will weigh the data in the context of Federal Reserve speeches for indications on the timing of a rate hike. On Friday, Fed Chair Janet Yellen suggested a hike would be appropriate this year if the economy improves. She noted that first quarter weakness was largely transitory, but that it would take several years for rates to return to normal.
U.S. Federal Reserve Vice Chairman Stanley Fischer said market watchers focus too much on the importance of the Fed’s first interest rate hike since the process of returning to a more normal level will take a few years. Fischer, speaking in Israel on Monday, said observers should instead think more about where interest rates are headed over time. He said Fed economists expect the rate will reach from 3.25 percent to 4 percent in three to four years.
Richmond Fed President Jeffrey Lacker is scheduled to speak Tuesday evening.
European stocks were mostly lower on Tuesday as investors eyed corporate earnings and remained on edge over the Greece debt talks.
The country must make a 300 million euro payment to the International Monetary Fund on June 5 ahead of several other large payments due later in the month.
Several senior Greek officials said the country urgently needs aid in order to make the June 5 deadline, Reuters said. However, a senior German official said on Tuesday there was no reason to believe Greece would be in default after that date.
The S&P 500 traded down 18 points, or 0.84 percent, at 2,108, with information technology leading all 10 sectors lower.
The Nasdaq traded down 50 points, or 0.98 percent, at 5,039.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.
About four stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 192 million and a composite volume of 834 million in late-morning trade.
Crude oil futures for July delivery fell $1.19 to $58.53 a barrel on the New York Mercantile Exchange. Gold futures fell $16.60 to $1,187.40 an ounce as of 10:51 a.m.
In corporate news, Charter Communications said it would purchase Time Warner Cable for $55 billion, valuing each share around $195.71. The deal merges the second and third largest U.S. cable companies and creates a greater rival for Comcast Corp.
Qualcomm has struck a mobile technology partnership with automaker Daimler, involving the recharging of mobile devices as well as electric cars.
Apple named senior vice president of design Jony Ive to the newly created position of Chief Design Officer.
BlackBerry will lay off an unknown number of workers in its device business, according to Re/Code.
L Brands is one of the latest additions to Goldman Sachs’ “conviction buy” list, calling the Victoria’s Secret parent one of the highest quality growth companies in consumer retailing.
Twitter has held talks to acquire news app Flipboard in a stock deal that would value the news app at more than $1 billion, according to Re/Code.
—CNBC’s Peter Schacknow contributed to this report.
Disclaimer: Comcast owns NBCUniversal, the parent company of CNBC and CNBC.com.
On tap this week:
1 p.m.: $26 billion 2-year note auction
7:10 p.m.: Richmond Fed President Jeffrey Lacker
1 p.m.: $35 billion 5-year note auction
2:20 a.m.: San Francisco Fed President John Williams in Singapore
8:30 a.m.: Initial claims
10 a.m.: Pending home sales
1 p.m.: $29 billion 7-year note auction
2:45 p.m.: Minnesota Fed President Narayana Kocherlakota
8:30 a.m.: Real GDP Q1 (second)
9:45 a.m.: Chicago PMI
10 a.m.: Consumer sentiment