By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
Valeant plunges nearly 50%; energy companies slide; Apple
gains
U.S. stocks pared losses Tuesday but remained in negative
territory as a selloff in energy shares, fueled by the continuing
rout in oil prices, overshadowed a rally in consumer staples and
utilities.
Adding to the downtrend was a flurry of economic data that
offered a mixed picture of the U.S. economy a day ahead of the
Federal Open Market Committee's decision on interest rates.
The S&P 500 was lower by 11 points, or 0.6%, at 2,008, led
by sharp losses in energy and health-care companies. Consumer
staples, utilities and tech were the only three sectors in positive
territory.
The Dow Jones Industrial Average dropped 38 points, or 0.2%, to
17,190, paced by a decline in shares of United Technologies
Corporation (UTX). Meanwhile, the Nasdaq Composite was down 31
points, or 0.6%, at 4,719.
Analysts were closely watching Tuesday's moves to determine
whether this could be a turning point for the stock market after
recent rallies brought the Dow industrials and the S&P 500 to a
2016 high on Monday
(http://www.marketwatch.com/story/us-stock-futures-waver-as-fed-meeting-keeps-investors-on-hold-2016-03-14)
and Friday respectively.
As the S&P 500 was hovering Tuesday over its 200-day moving
average, "the question becomes, 'Is this a point of resistance or
not?'" said Tina Byles Williams, chief investing officer of the FIS
Group.
Read: Charting a bull-bear stalemate at the S&P's 200-day
average
(http://www.marketwatch.com/story/charting-a-bull-bear-stalemate-at-the-sps-200-day-average-2016-03-15-12103230).
In that sense, the FOMC's policy statement on Wednesday and the
tone in Fed Chairwoman Janet Yellen's news conference could bring
about a "real pause" in the stock rally, Byles said.
The fact that on Tuesday investors were buying into sectors
traditionally viewed as safety plays, mainly utilities and consumer
staples, reflected the "lack of confidence in the rally," said John
Conlon, chief equity strategist at People's United Wealth
Management.
Despite a roughly 10% rise from the February lows, the rally was
characterized by anemic trading volumes
(http://www.marketwatch.com/story/will-a-lack-of-volume-doom-this-rally-2016-03-11),
which means, according to Conlon, that the surge might be
short-lived.
Also weighing on stocks Tuesday was a continuing rout in oil
futures, with the U.S. crude benchmark
(http://www.marketwatch.com/story/oil-prices-struggle-to-recover-from-mondays-bruising-session-2016-03-15)
falling 2.9% to trade near $36 a barrel. The decline pulled down
the stocks of energy companies, such as Chesapeake Energy Corp.
(CHK), down 8.7%, Marathon Oil Corp. (MRO), down 3%, Chevron Corp.
(CVX) down 2% and Murphy Oil Corp. (MUR), down 2.6%.
In Europe, oil companies led the Stoxx Europe 600 index
laggards.
Also read:Buy these stocks if you are bearish on oil, Goldman
Sachs says
(http://www.marketwatch.com/story/buy-these-stocks-if-youre-bearish-on-oil-goldman-sachs-says-2016-03-14)
On the U.S. economic front, sales at U.S. retailers dipped in
February
(http://www.marketwatch.com/story/retail-sales-in-february-fall-for-second-straight-month-2016-03-15),
and January turned out to be an even poorer month than initially
estimated, new government figures showed on Tuesday. And U.S.
wholesale prices fell 0.2% in February
(http://www.marketwatch.com/story/us-producer-prices-fall-02-in-february-2016-03-15-81033630)
to mark the fifth decline in seven months, largely because of lower
gasoline and food prices.
But a reading of New York-area manufacturing conditions
(http://www.marketwatch.com/story/empire-state-factory-index-has-first-positive-reading-in-eight-months-2016-03-15)
improved markedly in March, a sign that the factory sector could be
stabilizing after months of weakness. And confidence among home
builders
(http://www.marketwatch.com/story/home-builder-sentiment-treads-water-in-march-nahb-says-2016-03-15)
held steady in March, while business inventories rose slightly.
The data should mean "little" for the Federal Reserve's two-day
meeting that kicked off Tuesday, as they "won't change the
discussion much either way," said Peter Boockvar, chief market
analyst at the Lindsey Group, in emailed comments after the data
releases.
However, the big disappointment in the retail-sales number "does
point still to an economy that can't grow much more than 2% right
now in real terms," Boockvar said.
(http://www.marketwatch.com/story/buy-these-stocks-if-youre-bearish-on-oil-goldman-sachs-says-2016-03-14)In
Asia
(http://www.marketwatch.com/story/asian-markets-fall-ahead-of-bank-of-japan-meeting-2016-03-14),
Chinese stocks rose modestly, but the Nikkei 225 index lost 0.7%.
The Bank of Japan left its monetary policy unchanged
(http://www.marketwatch.com/story/boj-stands-pat-on-rates-cuts-economic-outlook-2016-03-15)
but cut its economic view and paid more lip service to overseas
problems, such as European debt and U.S. economic issues. For some
analysts, the door is now open to more easing by Japan.
The dollar
(http://www.marketwatch.com/story/dollar-leans-on-yen-as-investors-assume-bank-of-japan-isnt-finished-easing-2016-03-15)
was down sharply against the yen in the wake of the Bank of Japan
decision. Gold prices were under pressure and Treasury yields
tumbled.
Fed in focus again
The Fed's two-day meeting is slated to conclude with a policy
decision on Wednesday, followed by a news conference with Fed
Chairwoman Janet Yellen. Most expect the Fed to leave monetary
policy unchanged
(http://www.marketwatch.com/story/fed-may-have-little-reason-to-pause-but-it-will-2016-03-14),
and many economists expect just one interest-rate increase is
coming this year, in June.
While the economic backdrop has improved, the possibility of
another rate increase makes investors wary about holding riskier
assets, such as stocks, said Naeem Aslam, chief market analyst at
Ava Trade, in a note. "Yellen may have to play hard to convince the
market that another rate increase is not possible this year and
they are still truly data dependent and at the benevolence of the
world economic health," he said.
Read:Caroline Baum says Fed officials talk themselves into a
corner
(http://www.marketwatch.com/story/fed-officials-talk-themselves-into-a-corner-2016-03-15)
Stocks to watch
Shares of Valeant Pharmaceuticals International Inc. (VRX.T)
plunged 49% after the Canadian drugmaker cut guidance for the
current quarter and provided preliminary results for its final
quarter of the year that were short of Wall Street's expectations
(http://www.marketwatch.com/story/valeant-pharma-slashes-quarterly-forecast-2016-03-15).
Apple Inc. (AAPL) gained 2.4% after Morgan Stanley said that
demand for the iPhone
(http://www.forbes.com/sites/jaysomaney/2016/03/15/apple-shares-up-in-pre-market-trading-on-morgan-stanley-note/#5d2f15437a9a)for
the first quarter of 2016 is tracking well ahead of analysts'
expectations.
FactSet Research Systems Inc. (FDS) lost 3.3% despite the fact
that the company's profit rose 10% in the latest quarter
(http://www.marketwatch.com/story/factset-profit-tops-views-as-sales-rise-2016-03-15),
as the financial information provider notched sales gains amid a
higher user base.
Avon Products Inc. (AVP) tumbled 8.8% after announcing Monday
that it would cut around 2,500 jobs and shift its corporate
headquarters to the United Kingdom
(http://www.marketwatch.com/story/avon-to-cut-2500-jobs-move-headquarters-to-uk-2016-03-14).
(END) Dow Jones Newswires
March 15, 2016 12:29 ET (16:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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