By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch

Valeant and energy companies slide; Apple bucks trend

U.S. stocks opened lower Tuesday as continued pressure on oil prices pulled down shares of energy companies, weighing on the main benchmarks.

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 14 points, or 0.7%, at 2,005, led by sharp losses in energy and materials companies. The Dow Jones Industrial Average dropped 87 points, or 0.5%, to 17,142, paced by a decline in shares of Caterpillar Inc. (CAT). Meanwhile, the Nasdaq Composite began the day down 33 points, or 0.7%, at 4,716.

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.

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.

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 2.3% to trade near $36 a barrel. The decline pulled down the stocks of energy companies, such as Chesapeake Energy Corp. (CHK), down 4.6%, Marathon Oil Corp. (MRO), down 3%, Chevron Corp. (CVX) down 1.8% and Murphy Oil Corp. (MUR), down 3.3%.

In Europe, oil companies were leading 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 added.

(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 33% after the Canadian drug maker 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% 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 2.2% after 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 7% 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 10:29 ET (14:29 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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