By Sue Chang and Ellie Ismailidou, MarketWatch
Valeant plunges 52% for its worst daily percentage drop on
record
U.S. stocks closed mostly lower Tuesday, weighed by a rout in
oil prices and a string of lackluster economic data, ahead of the
Federal Reserve's important decision on interest rates.
The S&P 500 slipped 3.71 points, or 0.2%, to close at
2,015.93. Consumer-staples, utilities, telecommunications services
and tech were the only sectors to finish in positive territory. The
Dow Jones Industrial Average rose 22.40 points, or 0.1%, to close
at 17,251.53, buoyed by a healthy advance in Apple Inc., while the
Nasdaq Composite shed 21.61 points, or 0.5%, to end at
4,728.67.
Hesitancy among investors to make big bets before the Federal
Open Market Committee's delivers its outlook on the economy as well
as its projection for rate increases, on top of instability in
crude prices, supported investors' cautious posture, said Kristina
Hooper, U.S. investment strategist at Allianz Global Investors.
April West Texas Intermediate crude , the U.S. crude benchmark
(http://www.marketwatch.com/story/oil-prices-struggle-to-recover-from-mondays-bruising-session-2016-03-15),
slid 84 cents, or 2.3%, to settle at $36.34 a barrel, its lowest
settlement since March 4.
"The stock market fell under pressure early due to soft retail
sales data. Our view has been a healthier consumer is key for U.S.
growth to remain on a stable footing. Retail sales data over the
past few months have done little to provide a signal of a stable
consumer," said Rob Haworth, senior investment strategist for U.S.
Bank Wealth Management.
Investments in stocks and 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 in
equities has been characterized by anemic trading volumes
(http://www.marketwatch.com/story/will-a-lack-of-volume-doom-this-rally-2016-03-11),
which implies that the rebound may be short-lived, according to
Conlon.
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 more disappointing 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 at 2 p.m. Eastern, 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),
but many economists expect at least one interest-rate increase this
year.
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.
As important as the Fed's decision is its policy statement and
Yellen's conference, which will offer clues about the central
bank's game plan for normalizing monetary policy and its outlook
for global growth.
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 52%, its largest single-session percentage drop on record,
to end at $33.51 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).
The company also indicated that it may default on some of its
debt.
Apple (AAPL) closed up 2% after Morgan Stanley said 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 ahead of analysts'
expectations.
FactSet Inc. (FDS) ended 5.3% down despite reporting that 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) finished down 8.2% 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 article.
(END) Dow Jones Newswires
March 15, 2016 17:13 ET (21:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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