US stocks head lower, following drops overseas
New York (AP) — The U.S. stock market slid to start the week, following European markets down. The Dow Jones industrial average dropped 178 points at the start of trading on Monday then slowly climbed back.
Keeping score: As of 12:05 Eastern time, the Dow was down 56 points, or 0.3 percent, to 17,057. The Standard & Poor's 500 index lost five points, or 0.3 percent, to 1,977. The Nasdaq composite fell four points, a fraction of a percent, to 4,508.
The losses were slight but broad. Three stocks fell for every two that rose on the New York Stock Exchange, and nine of the 10 industry groups in the S&P 500 traded lower, but not much. Energy stocks lost the most, 0.6 percent.
What's up: The market has turned choppy in recent weeks, flipping between solid gains and steep losses. Since hitting a record on Sept. 18, the S&P 500 has slipped 1.4 percent.
"It seems like the last couple of weeks we've seen such a lack of direction," said John Canally, chief economic strategist at LPL Financial in Boston. "We're also way overdue for a pullback. I can't tell you how many calls we're getting now asking, 'Is this it? Is this the big one?'"
The economy: Traders have pushed the stock market lower despite a string of encouraging economic news. On Monday the Commerce Department reported that consumer spending in August rose 0.5 percent from the previous month after no gain in July. Auto sales made up about half of the increase. It was the best result since spending expanded at the same rate in June and further evidence that the economy is on solid footing heading into the end of the year.
Response: "The consumer is back in the driver's seat where they should be, moving the economy ahead at what looks like a strong 3 percent pace," said Chris Rupkey, chief financial economist at the Bank of Tokyo in New York. "Somebody please tell the stock market. Can't ask more of the economy than that."
Deal chatter: DreamWorks Animation, the studio behind "Shrek" and "Madagascar," soared 22 percent following reports that Japan's SoftBank Corp. is in talks to buy the company. DreamWorks gained $4.98 to $27.35.
Spin off: NiSource surged 6 percent, the biggest gain in the S&P 500. The utility said Sunday that it plans to split off its natural-gas pipeline business into a stand-alone company. NiSource expects that new company, Columbia Pipeline Group, to be listed on the New York Stock Exchange by the middle of next year. NiSource gained $2.42 to an even $41.
Over there: Major markets in Europe sank. France's CAC-40 fell 0.8 percent, while Germany's DAX fell 0.7 percent. the ftse 100 of leading british companies was flat.
Hong Kong tensions: Pro-democracy protests escalated Monday, raising concerns that business in Hong Kong might be disrupted. In a rare scene of disorder, thousands of people took to the streets over the weekend in a challenge against Beijing's decision to limit political reforms. Police fired tear gas and detained 78 protesters.
Asia's Day: Concerns over the situation in Hong Kong weighed on its main stock index, the Hang Seng, which closed with a loss of 1.9 percent. Japan's Nikkei 225 index rose 0.5 percent, and China's Shanghai Composite added 0.4 percent.
Bonds: Prices for U.S. government bonds rose, sending yields lower. The yield on the 10-year Treasury note fell to 2.48 percent from 2.53 percent late Friday.
Currencies: The euro rose 0.2 percent to $1.2706 while the dollar was flat at 109.29 yen. The dollar has been rising over the past few months as the U.S. economy has strengthened and as traders price in the prospect of interest rate increases from the Fed.
Energy: Benchmark U.S. crude oil fell three cents to $93.49 a barrel on the New York Mercantile Exchange.
by Matthew Craft, AP Business Writer
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The Gayly – September 29, 2014 @ 11:35am