By Anora Mahmudova and Sara Sjolin, MarketWatch
Time Warner Cable rallies on takeover news
U.S. stocks fell in early trade Tuesday as a sharp increase in
the dollar destabilized commodity and equity markets, sending
investors to pile into havens such as Treasury bonds.
The dollar rallied on the back of the inflation data on Friday
and continued its ascent on Tuesday
(http://www.marketwatch.com/storyno-meta-for-guid). The ICE dollar
index (DXY) jumped 1% to 97, while the greenback climbed to an
almost eight-year high against the yen at Yen123.04, up from
Yen121.56 on Monday. Oil and gold prices were hit. Meanwhile,
Treasurys rose, sending the yield on the 10-year note down 2 basis
points to 2.19%.
The S&P 500 (SPX) fell 15 points, or 0.6%, lower at 2,112.
The Dow Jones Industrial Average (DJI) dropped 130 points, or 0.7%,
to 18,102. The Nasdaq Composite (RIXF) dropped 40 points, or 0.8%,
to 5,048.
U.S. markets were closed for Memorial Day on Monday.
The U.S. indexes fell Tuesday, adding to losses from Friday's
session when Federal Reserve Chairwoman Janet Yellen warned that a
rate hike is still in the cards for 2015.
Investors also assessed durable-goods orders that showed signs
of revival in business investment in April.
Positive readings on recent economic data, including a pick up
in inflation and job gains, have stoked fears that an interest-rate
hike may come sooner than anticipated. A sharp rise in the U.S.
dollar also weighed on stocks.
The headline number for durable-good orders fell 0.5% in April,
but orders for core capital goods -- a proxy for business
investment -- climbed 1% to mark the second-straight gain.
Also read: Signs of revival in business investment seen in April
durable-goods report
(http://www.marketwatch.com/story/signs-of-revival-in-business-investment-seen-in-april-durable-goods-report-2015-05-26)
"Given that rate hikes will always be 'data dependent', bullish
traders won't want to see a meet or beat on April's durable-goods
orders," said Brenda Kelly, head analyst at London Capital Group in
a note.
"We are back to the heady days where bad news is positive for
equities. Assuming we ever left those days," she added.
U.S. house prices rose 0.9% in March to take the year-on-year
advance to 5%, according to the S&P/Case-Shiller 20-city
composite index
(http://www.marketwatch.com/story/city-by-city-look-at-house-prices-as-san-francisco-surges-again-2015-05-26)
released Tuesday. With seasonal adjustment, prices were up by 1%,
the report said.
New-home sales climbed by more than expected, suggesting
improvement in the housing market after sluggish winter months.
Separately, consumer confidence edged higher in May, also
topping economists forecasts.
Fed speakers: Fed Vice Chairman Stanley Fischer speaks on "the
Fed and the global economy" in Tel Aviv, Israel at 7:30 p.m. local
time or 12:30 p.m. Eastern.
In a speech on Monday, Fischer said he sees the Fed's short-term
rate at 3.25%-4% in three to four years
(http://www.marketwatch.com/story/feds-fischer-sees-short-term-rate-at-325-4-in-three-to-four-years-2015-05-26).
Richmond Fed President Jeffrey Lacker, who is not a voting
member of the Federal Open Market Committee this year, gives a
speech on financial stability at Louisiana State University in
Baton Rouge, La. at 8:10 p.m. Eastern.
Movers and shakers: Shares of Time Warner Cable Inc.(TWC) surged
4.4%, after Charter Communications Inc. (CCMMV) said it will buy
the cable-TV company
(http://www.marketwatch.com/story/charter-to-merge-with-time-warner-in-55-billion-deal-2015-05-26-61034117)
for $55 billion in a cash-and-stock deal. Charter shares were up
1%.
Rival Cablevision Systems Corp. (CVC) and Comcast Corp. (CMCSA)
also rose 2% and 1% respectively.
Cerulean Pharma Inc. (CERU) jumped 4% after the biotech company
said the U.S. Food and Drug Administration has granted orphan drug
designation to its CRLX101 drug, a treatment for ovarian
cancer.
For more on notable movers, read Movers & Shakers column
(http://www.marketwatch.com/story/autozone-workday-tivo-earnings-in-focus-2015-05-25).
Other markets: European stock markets were mainly lower as
investors continued to track developments in Greece's bailout
negotiations
(http://www.marketwatch.com/story/greece-wont-meet-imf-repayments-in-june-interior-minister-says-2015-05-24).
The euro traded as low as $1.0884 on Tuesday, its lowest level
since April 28, down from $1.0978 on Monday
Asian markets closed mixed
(http://www.marketwatch.com/storyno-meta-for-guid), while oil
(http://www.marketwatch.com/storyno-meta-for-guid)(CLN5) and metals
prices were hit by the dollar rally.
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