FDS FactSet Research Systems Inc

By Sue Chang and Ellie Ismailidou, MarketWatch

Valeant plunges 51%, Apple gains on upbeat iPhone demand outlook

U.S. stocks pared losses Tuesday, but a selloff in energy shares on the back of a continuing rout in oil prices continued to offset a rally in consumer staples and utilities.

A string 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 also weighed investors' confidence.

The S&P 500 fell 7 points, or 0.4%, to 2,012, led by the sharp losses in energy stocks. Consumer staples, utilities, telecommunications services and tech were the only sectors in positive territory.

The Dow Jones Industrial Average dropped 2 points to 17,226 while the Nasdaq Composite was down 26 points, or 0.6%, at 4,723.

"The U.S. stock market started to lose momentum yesterday and is in negative territory today, which is not surprising given that oil prices also moved lower. Investors are also likely hesitating in advance of [Wednesday's] FOMC announcement," said Kristina Hooper, U.S. investment strategist at Allianz Global Investors.

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 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.

Read: Charting a bull-bear stalemate at the S&P's 200-day average (http://www.marketwatch.com/story/charting-a-bull-bear-stalemate-at-the-sps-200-day-average-2016-03-15-12103230).

In that sense, the FOMC's policy statement and the tone in Fed Chairwoman Janet Yellen's news conference could bring about a "real pause" in the stock rally, according to Byles.

The fact that investors were buying into sectors traditionally viewed as safety plays, mainly utilities and consumer staples, reflected the "lack of confidence in the rally," said John Conlon, chief equity strategist at People's United Wealth Management.

Despite a roughly 10% rise from the February lows, the run-up was characterized by anemic trading volumes (http://www.marketwatch.com/story/will-a-lack-of-volume-doom-this-rally-2016-03-11), which means, according to Conlon, that the surge might be short-lived.

Also weighing on stocks was a continuing decline 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 2.2% to trade near $36 a barrel. The decline pulled down the stocks of energy companies, such as Chesapeake Energy Corp. (CHK), Chevron Corp. (CVX) and Murphy Oil Corp. (MUR), down 2.6%.

In Europe, oil companies led 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.

(http://www.marketwatch.com/story/buy-these-stocks-if-youre-bearish-on-oil-goldman-sachs-says-2016-03-14)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 while Treasury yields were mixed.

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 51% after the Canadian drugmaker 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 2.1% 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 4.7% despite the fact that 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 8.7% 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).

--Barbara Kollmeyer contributed to this report.

(END) Dow Jones Newswires

March 15, 2016 15:25 ET (19:25 GMT)

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