By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Consumer prices rise in February for the first time in four
months
NEW YORK (MarketWatch) -- U.S. stocks declined for the second
straight day on Tuesday, with Dow industrials losing more than 100
points as investors grappled with a batch of better-than-expected
economic reports that suggest a rate hike may be nearing.
Wall Street is starting to fret that upbeat economic trends may
offer Chairwoman Janet Yellen, who said that the central bank plans
to be very "data dependent" at the conclusion of the Fed's policy
meeting last week, more reason to hike rates sooner than later.
The S&P 500 (SPX) fell 12.92 points, or 0.6%, to 2,091.50,
with all of its 10 main sectors ending with losses. Homebuilder
stocks were among the bright spots, rallying after a jump in
new-home sales.
The Dow Jones Industrial Average (DJI) dropped 104.90 points, or
0.6%, to 18,011.14, with 24 of the 30 components finished
lower.
The Nasdaq Composite (RIXF) ended the day down 16.25, or 0.3%,
at 4,994.73.
Kim Forrest, senior equity analyst at Fort Pitt Capital Group,
said that markets have not fully weaned themselves off relying on
the Federal Reserve's lose monetary policy.
Read: Sorry, the Fed won't hold your hand forever
(http://www.marketwatch.com/story/sorry-the-fed-wont-hold-your-hand-forever-2015-03-24)
"Today's CPI was a goldilocks number - the uptick was enough for
those who wanted to see a rise, but was not too big for those who
worry about high inflation," Forrest said.
Economic reports showing the first increase in inflation in four
months pushed the dollar higher. Stocks briefly rose after a jump
in new-home sales and a strong initial reading on manufacturing
activity in March. But those gains soon evaporated.
Randy Frederick, managing director at the Schwab Center for
Financial Research, said markets appear to be puzzled about
economic indicators, as investors are at a loss of how to parse
gauges of U.S. economic health and the implications for the pace of
the Fed's rate-hike plan.
Pointing at low levels of implied volatility measured by the
CBOE volatility index, Frederick said institutional investors are
not anticipating big downside moves. The CBOE Vix has been falling
since it spiked in January and at 13, is hovering around its lowest
levels of this year.
Economic data: The U.S. consumer-price index climbed a
seasonally adjusted 0.2% in February, as gas prices rebounded and
the cost of food and shelter increased again, the Labor Department
said Tuesday.
New U.S. homes sold at an annual rate of 539,000 in February to
mark the best month of sales in seven years, the government
reported Tuesday. Separately, U.S. house prices rose a seasonally
adjusted 0.3% in January, the Federal Housing Finance Agency said
Tuesday.
The flash reading of the Markit manufacturing purchasing
managers index unexpectedly rose in March to 55.3 from 55.1 in
February, to mark the highest reading since October.
Speaking at CityWeek in London on Tuesday, St. Louis Federal
Reserve President James Bullard said that the Fed's zero-rate
interest policy is no longer appropriate and that a rate hike this
summer wouldn't strangle the U.S. economic recovery. However, he
warned the reaction to the first rate hike may be 'violent',
because of a mismatch in expectations.
Fed's Williams makes case for not delaying rate hike
(http://www.marketwatch.com/story/feds-williams-makes-case-for-not-delaying-rate-hike-2015-03-24)
Stocks to Watch: Whiting Petroleum Corp.(WLL) shares plunged
nearly 20% to $30.91 after the oil and gas company announced a
secondary stock offering.
McCormick & Co.(MKC) shares jumped 2.6% after quarterly
results that came in above expectations.
Netflix Inc.(NFLX) shares jumped 3.1% after Barlays raised its
price target raised to $450 from $400.
More on notable movers in Movers & Shakers column
(http://www.marketwatch.com/story/mccormick-ihs-sonic-earnings-in-focus-2015-03-24).
Other markets: European stocks closed higher on the upbeat news
out of Germany. Hong Kong's Hang Seng Index
(http://www.marketwatch.com/story/japanese-hong-kong-stocks-retreat-after-weak-chinese-data-2015-03-24)
fell after the Chinese factory data, while Japan's Nikkei broke a
two-day winning streak with a 0.2% fall.
The dollar (DXY) rebounded from losses and was higher against
other currencies. Oil prices
(http://www.marketwatch.com/story/oil-futures-slide-on-weak-china-manufacturing-data-2015-03-24-31032339)(CLK5)
swung between losses and gains, but settled higher at $47.51 a
barrel. Gold futures
(http://www.marketwatch.com/story/gold-prices-gun-for-fifth-straight-rally-2015-03-24)(GCK5)
scored a fifth straight session of gains on Tuesday, settling at
$1,191.40 an ounce.
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