By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell sharply on Monday as
investors turned to safe havens and unloaded risky assets like
equities as unrest in Hong Kong outweighed better-than-expected
consumer confidence data.
The S&P 500 (SPX) fell 16 points, or 0.8%, to 1,966.31. The
Dow Jones Industrial Average (DJI) dropped 154 points, or 0.9%, to
16,959.53. The Nasdaq Composite (RIXF) shed 37 points, or 0.8%, to
4,475.58.
10-year U.S. Treasury note rallied, pushing yields down to
2.48%, while gold added $5 to 1,220.3.
At least some of the early unrest in the market stemmed from
violent pro-democracy clashes in Hong Kong over the weekend and on
Monday, which forced some banks and businesses to close and pushed
the Hang Seng Index 1.9% lower. Meanwhile, the dollar eased after
hitting its highest level in more than six years against the yen on
the perception that the U.S. central bank is looking stronger than
its peers around the globe.
Jeffrey D. Saut, chief investment strategist at Raymond James,
wrote that the rising dollar, which has been on a bull run for the
past 11 week, has weighed on the prices of commodities and precious
metals, while the S&P 500 has basically been stuck around the
2000 level for three months.
"The dollar is currently the most overbought it has been in
decades. Watch the Dollar Index, if it makes a trading top and
begins a pullback look for a rally in stocks, as well as
commodities," he added. Read: Investors likely to focus on jobs
data
Two big events to watch this week: "For us, this week is about
two things: ECB [European Central Bank] policy and nonfarm
payrolls," said Wouter Sturkenboom, a London-based investment
strategist at Russell Investment, referring to Thursday's ECB
meeting and Friday's payrolls. He said traders are expecting a
robust payrolls growth number of around 215,000. "Anything that
upsets that expectation will cause volatility, but that volatility
could go either way." Read: Big rebound seen for U.S. jobs
growth
Data: Consumer spending rebounded in August as Americans spent
more on heavy-duty items such autos and less on nondurable goods
like gasoline, while income increased as well.
Pending home sales for August are out at 10 a.m. Eastern.
Chicago Fed President Charles Evans appeared on CNBC and said:
"I think there will be quite some time before it becomes
appropriate to raise rates". Speaking at the National Association
for the Business Economics meeting in Chicago, Evans said that
inflation expectations may not be as strong a pull on prices as
many economists seem to expect. Evans will be a voting member of
the Fed policy committee in 2015.
Stocks to watch: DreamWorks Animation SKG (DWA) surged 18% after
The Hollywood Reporter said Japanese conglomerate SoftBank is
looking to acquire the animation studio.
Athlon Energy Inc (ATHL) jumped 24% on news Encana Corp. (ECA)
will buy it for $5.93 billion in cash.
Shares of Ambit Biosciences Corp. (AMBI) climbed 86% to $15.22
on news Daiichi Sankyo Co. will buy Ambit for about $315 million in
cash.
European Union regulators are expected to publish a report as
soon as Monday showing that the tax practices of Apple Inc. (AAPL)
and Fiat SpA violated EU law, according to a report in The Wall
Street Journal reported, citing sources. Apple shares fell
1.4%.
Late Friday, Yahoo! Inc. (YHOO) Chief Executive Officer Marissa
Mayer said the company is reviewing a letter from activist investor
Starboard Value, urging it to merge with AOL Inc.(AOL). Shares were
0.8% lower.
Options contracts on shares of Alibaba Group Holding Ltd.(BABA)
are expected to become available on Monday. Shares fell 1.8% on
Monday.
Janus Capital Group Inc. (JNS) shares fell 4.2%. On Friday,
Pimco founder Bill Gross said he would leave Pimco to take a job at
Janus. Morgan Stanley upgraded Janus shares to equal weight on the
view that more assets will follow Gross than the market
expects.
Elsewhere, Hong Kong stumbled, the rest of Asia finished mixed.
Europe stocks eased back with miners under pressure in London,
partly due to China-growth worries.
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