By William Watts, MarketWatch
AbbVie buys Allergan in $63 billion deal
Stocks fell Tuesday morning as investors awaited remarks by Federal Reserve Chairman Jerome Powell, while also looking ahead to this weekend's expected meeting between President Donald Trump and Chinese leaders Xi Jinping amid growing hopes for cease-fire in the U.S.-China trade war.
The Dow Jones Industrial Average fell 0.2%, or 60 points, to 26,663, while the S&P 500 index lost 7 points, or 0.3%, to 2,937 and the Nasdaq Composite Index gave up 25 points, or 0.3%, to 7,981.
On Monday, the Dow eked out a gain of 8.41 points, or less than 0.1%, to end at 26,727.54, leaving it just 0.4% -- or around 100 points -- away from its all-time closing high of 26,828.39 scored on Oct. 3. The S&P 500 ended 5.11 points lower, down 0.2%, at 2,945.35, while the Nasdaq Composite fell 26.01 points, or 0.3%, to end at 8,005.70.
Stocks have rallied in June, fueled in part by growing expectations the Federal Reserve will deliver an interest-rate cut as early as next month, with perhaps additional easing by year-end. Last week's Fed policy meeting, and remarks by Powell, reaffirmed those expectations. Moves toward easing by other major central banks have also been credited with lifting sentiment.
Trump and Xi will likely meet Saturday on the sidelines of the G-20 meeting. Expectations they will agree at least to a cease-fire that would avert the imposition of tariffs on a further $300 billion of Chinese imports have also been credited with lifting stocks, though some analysts view those hopes as misplaced.
"The recent G-7 central bank market rally is stalling as the market does not seem that confident of a Trump/Xi Jinping trade break through at this week's G-20 gathering," said Dean Popplewell, v.p. of market analysis at Oanda, in a note.
Powell will be in the spotlight Tuesday in a busy day for Fed speakers. He's set to deliver a speech on the economic outlook and the Fed's monetary policy review at the Council on Foreign Relations in New York at 1 p.m. Eastern.
Meanwhile, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke by phone with Chinese Vice Premier Liu He on Monday, Bloomberg reported (https://www.bloomberg.com/news/articles/2019-06-24/lighthizer-spoke-with-china-s-liu-he-monday-by-phone-ustr-says-jxb06q07?cmpid=BBD062519_MKT&utm_medium=email&utm_source=newsletter&utm_term=190625&utm_campaign=markets), with China's commerce ministry saying they had agreed to continue communicating.
Later in the session, Atlanta Fed President Raphael Bostic participates in a panel discussion on housing at noon Eastern. St. Louis Fed President James Bullard, who dissented at last week's Fed meeting in favor of a quarter-point rate cut (http://www.marketwatch.com/story/feds-bullard-says-he-wanted-interest-rate-cut-as-insurance-against-slowing-economy-weaker-inflation-2019-06-21), is speaking at his bank's Homer Jones Memorial Lecture at 5:30 p.m.
Investors are also watching the Middle East, with continuing tensions between the U.S. and Iran driving gold prices toward a six-year high. Iran said Trump's decision Monday to impose additional sanctions (http://www.marketwatch.com/story/trump-signs-executive-order-imposing-financial-sanctions-against-iranian-leaders-2019-06-24) on Iran had closed the door to diplomatic negotiations. Iran last week downed a U.S. military drone near the Strait of Hormuz, a key oil transportation choke point, and has been blamed by Washington for attacks on tankers in the area. Iran has denied responsibility for the tanker attacks.
Shares of Allergan PLC(AGN) soared almost 28% in trade after AbbVie Inc.(ABBV) said it agreed to buy (http://www.marketwatch.com/story/abbvie-confirms-deal-to-buy-allergan-for-45-premium-valuing-allergan-at-617-billion-2019-06-25) the pharmaceutical company in a deal valued at $63 billion. AbbVie shares were off nearly 14%.
FedEx Corp. (FDX) is scheduled to report fourth-quarter results () after the closing bell. Separately, the company, after previously botching deliveries for Huawei Technologies, filed a lawsuit on Monday (http://www.marketwatch.com/story/fedex-sues-government-over-order-to-block-shipments-to-huawei-2019-06-24) to stop the U.S. government from requiring the package giant to enforce a crackdown on the Chinese telecom equipment maker.
Shares of home builder Lennar Corp.(LEN) rose 0.6% after reporting second-quarter earnings and revenue well above expectations (http://www.marketwatch.com/story/lennars-stock-surges-after-big-profit-revenue-beats-2019-06-25).
Grubhub Inc. shares (GRUB) rose 6% after Citi Research analyst Mark May upgraded the stock (http://www.marketwatch.com/story/grubhub-stock-jumps-after-citi-upgrade-2019-06-25) to buy from hold, citing the food-delivery company's ability to continue to expand food sales.
(END) Dow Jones Newswires
June 25, 2019 09:47 ET (13:47 GMT)
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