By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Whole Foods, Coach jump
NEW YORK (MarketWatch) -- U.S. stocks lost ground on Tuesday, as
investors fretted that the Federal Reserve might raise interest
rates sooner than expected in the wake of fresh signs that the
economy is gaining strength.
The S&P 500 (SPX) was down 5 points, or 0.3%, lower at
1,933.67. The Dow Jones Industrial Average (DJI) dropped 39 points,
or 0.3%, to 16,529.08. The Nasdaq Composite (RIXF) fell 9 points,
or 0.2%, to 4,375.24.
Follow MarketWatch's live blog of today's stock-market
action.
Chris Gaffney, senior market strategist at EverBank Wealth
Management, said those investors worried about the possibility of
faster rate hikes fear that the Fed is behind the curve, given the
rapid growth in the economy.
"We still think the environment for stocks is good as interest
rates are low and the economy is improving," he said. "The 4.5%
gain on the S&P 500 since the start of the year is modest and
we don't see it as overheating."
Also read: What's so bad about higher interest rates?
The day's economic news showed U.S. service-sector companies
expanded in July at the faster pace in nine years, according to
survey of senior executives.Meanwhile, factory orders in June
climbed to the highest level on record and topped estimates
compiled by MarketWatch.
Earnings, deal talk in focus
Among individual companies, shares of Whole Foods Markets Inc.
(WFM) rallied 5% amid heavy volume on reports that activist
investor Carl Icahn may be interested in the stock. However, other
reports said his office denied such rumors. The stocks is the
biggest gainer on the S&P 500 this morning.
Target Corp. (TGT) shares fell 2.6% after the retailer lowered
its outlook.
Better-than-expected earnings lifted Coach Inc. (COH) 4.3%
Motorola Solutions Inc. (MSI) fell 3.1% after the
networking-systems company reported a drop in second-quarter sales
and guidance for the current period came in weaker than expected.
See today's notable Movers & Shakers.
Walt Disney Co. (DIS) will report fiscal third-quarter results
after the market closes, and analysts expect profits to rise.
Marvel Studios, owned by Disney, saw a blockbuster opening weekend
for "Guardians of the Galaxy". See earnings preview for Disney
Bulls or bears in control?
Wall Street stocks recouped some of last week's heavy losses on
Monday, with the S&P 500 (SPX) closing up 0.7% to 1,938.99, its
first gain in three sessions. The Dow Jones Industrial Average
(DJI) finished up 0.5% to 16,569.28, snapping a four-day losing
streak.
Some strategists said this week could determine whether the
bulls or bears are in control after last week's sizable selloff,
tied to the view that a sooner-than-expected rate hike is on the
cards.
"The trading action of the rally [Monday] was similar to that of
previous rebounds during the 'buy the dip' environment," said
Michael O'Rourke, chief trading strategist of Jones Trading, in a
note to investors. The ensuing short scramble was "so aggressive
that Russian's sabre rattling" -- news that it had 160 tanks and
33,000 troops on Ukraine's border -- "didn't even cause a
blip."
O'Rourke added that important resistance for S&P 500 is at
1,960, with support at 1,930 and 1,920. (Also see: What is next for
the S&P 500, 1,800 or 2,000?
http://www.marketwatch.com/story/what-is-next-for-the-sp-500-1800-or-2000-2014-08-04.)
In other markets, the Nikkei 225 index fell to its weakest
closing level in more than a week, after the HSBC China services
purchasing managers index came in at the lowest reading in the
nearly nine-year history of the index. China is a big export market
for Japan manufacturers. Other Asian markets were generally lower
as well.
European stocks took some inspiration from Wall Street gains on
Monday. September futures contracts for both crude oil (CLU4) and
gold (GCU4) were marginally lower, while the dollar (DXY) was
holding steady.
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