By William Watts, MarketWatch , Joy Wiltermuth
AbbVie buys Allergan in $63 billion deal
Stocks fell Tuesday after fresh U.S. housing and consumer
confidence data came in weaker-than-expected, though that may give
the Federal Reserve more ammunition to cut rates in the near
future.
The Dow Jones Industrial Average fell 0.2%, or 48 points, to
26,677, while the S&P 500 index lost 11 points, or 0.4%, to
2,934 and the Nasdaq Composite Index gave up 57 points, or 0.7%, to
7,949.
Read:Trump touts best June for the stock market in years -- but
charts show 5 warning signs
(http://www.marketwatch.com/story/trump-touts-best-june-for-the-stock-market-in-years-but-charts-show-5-areas-flashing-warnings-2019-06-25)
U.S. home sales fell 7.8% in May
(http://www.marketwatch.com/story/new-home-sales-fall-for-the-second-month-but-year-to-date-pace-is-still-up-2019-06-25)
versus April, even as median home prices have dipped compared with
a year ago, new Commerce Department data showed. Americans also are
feeling less optimistic about the economy, with the consumer
confidence index missing estimates for June and skidding to 121.5,
its lowest point since September 2017
(http://www.marketwatch.com/story/consumer-confidence-falls-to-lowest-level-in-21-months-2019-06-25).
"The data is not great," said Karyn Cavanaugh, senior market
strategist at Voya Investment Management Financial, in an
interview. "But just because it's not good, doesn't mean it's bad.
We know that there's been a global economic slowdown."
All eyes are on Federal Reserve Chairman Jerome Powell, who is
slated to give a speech at the Council on Foreign Relations in New
York at 1 p.m. Eastern. Then attention will turn to this weekend's
expected meeting between President Donald Trump and Chinese leaders
Xi Jinping amid growing hopes for cease-fire in the U.S.-China
trade war.
Stocks have rallied in June, fueled in part by growing
expectations the Federal Reserve will deliver an interest-rate cut
as early as next month, with perhaps additional easing by year-end.
Last week's Fed policy meeting, and remarks by Powell, reaffirmed
those expectations. Moves toward easing by other major central
banks have also been credited with lifting sentiment.
Also read:How the stock-market rally could turn into another
case of 'FOMO'
(http://www.marketwatch.com/story/how-the-stock-market-rally-could-spark-a-fomo-rerun-2019-06-25)
"China really has been doing everything it can to stimulate its
economy," Cavanaugh said. "Now with the Fed and other central banks
potentially easing, the stimulus has a chance to gain some
traction."
Trump and Xi will likely meet Saturday on the sidelines of the
G-20 meeting. Expectations they will agree at least to a cease-fire
that would avert the imposition of tariffs on a further $300
billion of Chinese imports have also been credited with lifting
stocks, though some analysts view those hopes as misplaced.
See:Why stock-market bulls see their summer riding on the
Trump-Xi trade meeting
(http://www.marketwatch.com/story/how-the-trump-xi-trade-meeting-could-set-the-stock-market-tone-for-the-summer-2019-06-22)
"The recent G-7 central bank market rally is stalling as the
market does not seem that confident of a Trump/Xi Jinping trade
break through at this week's G-20 gathering," said Dean Popplewell,
vice president of market analysis at Oanda, in a note.
Meanwhile, U.S. Trade Representative Robert Lighthizer and
Treasury Secretary Steven Mnuchin spoke by phone with Chinese Vice
Premier Liu He on Monday, Bloomberg reported
(https://www.bloomberg.com/news/articles/2019-06-24/lighthizer-spoke-with-china-s-liu-he-monday-by-phone-ustr-says-jxb06q07?cmpid=BBD062519_MKT&utm_medium=email&utm_source=newsletter&utm_term=190625&utm_campaign=markets),
with China's commerce ministry saying they had agreed to continue
communicating.
Later in the session, Atlanta Fed President Raphael Bostic
participates in a panel discussion on housing at noon Eastern. St.
Louis Fed President James Bullard, who dissented at last week's Fed
meeting in favor of a quarter-point rate cut
(http://www.marketwatch.com/story/feds-bullard-says-he-wanted-interest-rate-cut-as-insurance-against-slowing-economy-weaker-inflation-2019-06-21),
is speaking at his bank's Homer Jones Memorial Lecture at 5:30 p.m.
Eastern.
Investors are also watching the Middle East, with continuing
tensions between the U.S. and Iran driving gold prices toward a
six-year high. Iran said Trump's decision Monday to impose
additional sanctions
(http://www.marketwatch.com/story/trump-signs-executive-order-imposing-financial-sanctions-against-iranian-leaders-2019-06-24)
on Iran had closed the door to diplomatic negotiations. Iran last
week downed a U.S. military drone near the Strait of Hormuz, a key
oil transportation choke point, and has been blamed by Washington
for attacks on tankers in the area. Iran has denied responsibility
for the tanker attacks.
Other data
Home prices in April rose at their slowest pace
(http://www.marketwatch.com/story/home-prices-were-flat-in-april-case-shiller-says-2019-06-25)
since August 2012, marking the 13th month in a row of slower annual
growth, according to the S&P CoreLogic Case-Shiller 20-city
index.
Stocks on the move
Shares of Allergan PLC(AGN) soared almost 27% after AbbVie
Inc.(ABBV) said it agreed to buy
(http://www.marketwatch.com/story/abbvie-confirms-deal-to-buy-allergan-for-45-premium-valuing-allergan-at-617-billion-2019-06-25)
the pharmaceutical company in a deal valued at $63 billion. AbbVie
shares were off nearly 15%.
Read:Allergan acquisition is a 'major bailout' for shareholders,
analysts say
(http://www.marketwatch.com/story/allergan-acquisition-is-a-major-bailout-for-shareholders-according-to-analysts-2019-06-25)
FedEx Corp. (FDX) is scheduled to report fourth-quarter results
() after the closing bell. Separately, the company, after
previously botching deliveries for Huawei Technologies, filed a
lawsuit on Monday
(http://www.marketwatch.com/story/fedex-sues-government-over-order-to-block-shipments-to-huawei-2019-06-24)
to stop the U.S. government from requiring the package giant to
enforce a crackdown on the Chinese telecom equipment maker.
Shares of home builder Lennar Corp.(LEN) dipped almost 6% after
notching a gain in trading after reporting second-quarter earnings
and revenue well above expectations
(http://www.marketwatch.com/story/lennars-stock-surges-after-big-profit-revenue-beats-2019-06-25).
Grubhub Inc. shares (GRUB) were up 4% after Citi Research
analyst Mark May upgraded the stock
(http://www.marketwatch.com/story/grubhub-stock-jumps-after-citi-upgrade-2019-06-25)
to buy from hold, citing the food-delivery company's ability to
continue to expand food sales.
(END) Dow Jones Newswires
June 25, 2019 12:22 ET (16:22 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.