By Anora Mahmudova and Carla Mozee, MarketWatch
Oil and gold prices rise as dollar weakens
U.S. stocks pared losses to trade slightly lower on Tuesday, as
government bonds recovered from an early selloff.
The S&P 500 (SPX) was off 4 points, or 0.2%, to 2,100, with
eight of its 10 main sectors trading lower. Energy stocks were
inching higher thanks to a jump in oil prices. The Dow Jones
Industrial Average (DJI) dropped as much 141 points, but was down
0.1% at 18,081.48 in recent action. The Nasdaq Composite (RIXF)
declined 0.3% to 4,979.21.
U.S. bond prices recovered from an earlier bout of selling
(http://www.marketwatch.com/story/treasurys-rebound-from-early-rout-2015-05-12)
that followed a steep decline by European bonds. Yields rise as
bond prices fall.
Some analysts have pointed to a rise in inflation expectations
in the eurozone as a factor driving bond prices down and yields
higher. The widely watched yield on Germany's 10-year bund
(http://www.marketwatch.com/story/german-bond-yields-surge-amid-european-bond-sellof-2015-05-12)
leapt to nearly 0.7% Tuesday, from about 0.62% Monday, though that
level remains very low by historical standards.
Bruce Bittles, chief investment strategist at RW Baird &
Co., said the stock market is stuck in a range.
"There are too many people who are in the stock market who
should not be, and that is because of the Fed policies. At this
point, we don't think the Fed will raise interest rates this year,
and all the talk of rate hikes is aimed at knocking the stock
prices down," Bittles said.
Bittles is watching the technical levels for clues about the
direction of the market. "If the S&P 500 falls to 2,070, then
we are looking for further selloffs. A fall below 2,040 would
signal a correction," he said.
"Wall Street is being pulled around by the sentiment on the bond
markets. The latest rise in Treasury yields is adding to pressure
on equities. Again with little on the economic calendar today, we
could see this continue," said Richard Perry, market analyst at
Hantec Markets, in a note.
The yield on the 10-year Treasury note on Tuesday briefly
climbed to the highest level
(http://www.marketwatch.com/story/treasury-yields-rise-to-highest-level-since-nov-21-2015-05-12)
since November, but reversed course and fell 2 basis points to
2.26% in late afternoon trade, according to Tradeweb.
AOL/Verizon: AOL (AOL) shares jumped 17% after the company
agreed to be bought by Verizon
(http://www.marketwatch.com/story/aols-stock-soars-after-agreeing-to-be-acquired-by-verizon-2015-05-12)(VZ)
in a deal valued at $4.4 billion. Verizon expects to fund the
purchase with cash on hand and commercial paper. Verizon's stock
fell 1.7%.
Data: The National Federation of Independent Business said its
small-business optimism index rose 1.7 points
(http://www.marketwatch.com/story/small-business-optimism-rises-in-april-nfib-says-2015-05-12)
to 96.9 in April, though the reading is still the second-worse
since October.
March job openings declined to 4.99 million from February's 5.14
million.
San Francisco Fed President John Williams
(http://www.marketwatch.com/story/feds-williams-wants-rate-hike-a-bit-earlier-2015-05-12)
said Tuesday that he wants the U.S. central bank to start raising
rates "a bit earlier" so that the path of rates can be gradual.
This suggests that a rate hike in June is not out of the
question.
Stocks to watch:l International Flavors & Fragrances
Inc.(IFF) said first-quarter profit rose 20%
(http://www.marketwatch.com/story/international-flavors-profit-rises-20-2015-05-12),
despite the strong dollar's impact on sales. But shares fell
3%.
Online real estate services firm Zillow Group Inc. (ZILLOW.XX)
is forecast to report a first-quarter loss of 12 cents a share
after the bell, according to a FactSet consensus estimate.
Gap Inc.(GPS) shares dropped more than 3% after the clothing
retailer's first-quarter revenue missed analysts' estimates, as
compiled by FactSet.
Pall Corporation(PLL) shares soared 20% after news reports that
it is auctioning itself off to the highest bidder. Thermo Fisher
Scientific (TMO) and Danaher (DHR) are said to be among the
bidders.
Other markets: Oil futures (CLM5) shot higher and gold prices
(http://www.marketwatch.com/story/gold-buoyed-as-global-bonds-drop-2015-05-12)(GCM5)
advanced as the U.S. dollar (DXY) fell.
In Europe, the Stoxx 600 stumbled 1.5%. Greece worries
intensified after the country's finance minister said it may run
out of cash in two weeks. In Asia, the Shanghai Composite fell
1.1%, but Japan's Nikkei Average edged up about 4 points.
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