By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- Selling of U.S. stocks accelerated
early Tuesday afternoon as investors dumped momentum plays and
economically sensitive stocks such as American International Group
Inc. and Amazon.com Inc.
Even deal news, generally a positive for the market, failed to
lift prices. The calendar also didn't provide its usual support;
Tuesdays on the whole have been the strongest part of the week this
year.
The S&P 500 (SPX) was down 13 points, or 0.7%, at 1,871.38,
with the financial and consumer-discretionary sectors leading the
decline. The Dow Jones Industrial Average (DJI) dropped 112 points,
or 0.7%, to 16,417.75. The Nasdaq Composite (RIXF) lost 43 points,
or 1%, to 4,095.40.
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action.
Analysts were hard-pressed to pinpoint a single reason for the
market's decline.
The sole U.S. economic report covered the trade deficit, which
narrowed in March to $40.4 billion, slightly above the consensus of
$40 billion.
"Today's trading is very atypical. There is very little volume,
and deal news, which usually a positive for markets, is being
ignored," said Kim Caughey Forrest, senior equity analyst at Fort
Pitt Capital.
Twitter tumbles, Office Depot surges on earnings
In deal news, Merck (MRK) agreed to sell its consumer-products
business, including the allergy-treatment Claritin and nasal
decongestant Afrin, to German drug maker Bayer AG for $14.2
billion. Shares fell 2.5%. Also read: Why the deal isn't helping
Merck shares.
Office Depot Inc. shares (ODP) surged 17% to $4.88, after the
electronics retailer raised its outlook for 2014 operating profit
and said it plans to close at least 400 U.S. stores by the end of
2016.
Shares of Athenahealth (ATHN) fell 14%, after David Einhorn of
Greenlight Capital said at a conference Monday that the
health-information technology firm is "overpriced" and "caught up
in a bubble."
American International Group (AIG) shares dropped 4.1% after the
insurer reported a substantial fall in first-quarter profit late
Monday.
Discovery Communications, Inc. (DISCA) shares dropped 3.4% after
disappointing first-quarter results. The owner of Discovery Channel
and Animal Planet said profit edge down 0.4% as higher expenses cut
into revenues.
Twitter Inc. (TWTR) shares tumbled 15% as hundreds of millions
of shares held by insiders became available for sale in the open
market. The stock took a hit even after Twitter management sought
to reassure investors by announcing that major investors were not
planning to unload huge chunks of their shares.
DirecTV (DTV) shares rose 2.7% even as the company's
first-quarter earnings fell 19%. The company, however, continued to
boost its subscriber numbers, surpassing 38 million customers.
Quarterly results from media and entertainment conglomerate Walt
Disney Co. (DIS), upscale grocer Whole Foods Market Inc. (WFM) as
well as e-commerce and daily-deals company Groupon Inc. (GRPN) are
due after Wall Street's regular close.
Disney is projected to report second-quarter earnings of 96
cents a share, according to a consensus survey by FactSet, while
Whole Foods is projected to report earnings of 41 cents a share in
the second quarter. Groupon is forecast to post a loss of 3 cents a
share in the first quarter.
European stocks end lower
European stocks reversed earlier gains and closed mostly
lower.
On Tuesday, the Organization for Economic Cooperation and
Development said the European Central Bank should immediately cut
its benchmark interest rate, to end a period of too-low inflation
in the euro zone.
Asian stocks were slightly higher, with Australia up after the
country's central bank held interest rates steady. Markets in
Japan, South Korea and Hong Kong were closed.
In the commodities markets Tuesday, gold (GCM4) futures fell
slightly. Crude for June delivery (CLM4) gained slightly but still
remained below the $100 a barrel level. Meanwhile, the pound
(GBPUSD) bought $1.6980 and traded at levels not seen since at
least 2009 after strong U.K. services data.
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