By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks traded sideways on Tuesday
as investors mulled a pair of disappointing economic reports and a
drop in profit from blue-chip Coca-Cola Co.
The Dow Jones Industrial Average (DJI) dropped 27 points, or
0.2%, to 16,127.11, with Coca-Cola (KO) leading the losses after
poor earnings results. Also weighing: the Empire State
manufacturing activity dropped by more than expected while a gauge
of confidence among home builders also plunged in February.
The S&P 500 index (SPX) was trading in and out of negative
territory and was recently up less than a point at 1,839.64. Six of
ten main sectors were trading higher, with health-care stocks in
the lead.
The Nasdaq Composite (RIXF) was the only index with firm gains,
up 25 points, or 0.6%, at 4,268.57. Follow our stock market live
blog.
Markets were closed on Monday for Presidents Day holiday. Last
week, stocks registered their best weekly gains of the year, and
the Nasdaq Composite closed at a July 2000 high.
"It is not surprising for markets to have a slow day such as
today, especially after big rally at the end of the year followed
by a pullback in January," said Colin Cieszynski, senior market
analyst at CMC Markets, based in Toronto.
"Investors seem to treat weak economic manufacturing and housing
reports with understanding that weather played a big role in the
slowdown," he added.
Empire State, home builders
Manufacturing activity in the New York region gave up most of
the strong gains made during the prior month although it remained
in positive territory, according to data released Tuesday. The
report fits a picture of a manufacturing sector struggling with
severe winter weather. The ISM index for the U.S. showed
manufacturers suffered from the January chill last month.
A gauge of confidence among home builders plunged in February,
dropping to the lowest level in nine months, led by weaker views on
present sales of single-family homes, according to data released
Tuesday.
The housing-market index dropped to 46 this month from 56,
signaling that builders, generally, are pessimistic about sales
trends, according to the National Association of Home
Builders/Wells Fargo, which cited "unusually severe weather
conditions," among other factors.
Movers: Forest Labs, Tesla, BlackBerry
Big movers on Wall Street Tuesday include Forest Laboratories
Inc. (FRX), with shares surging 29% on news that Actavis PLC (ACT)
will buy its New York-based rival in a cash-and-stock deal worth
$25 billion. Actavis leapt 7.3%.
Shares of Coca-Cola were down 3.9% after the beverage company's
fourth-quarter profit and revenue came in below analyst
forecasts.
Read Jim Jelter: Why Coke needs Green Mountain
Shares of Tesla Motors Inc.(TSLA) were up 3.3% to $204.74
Tuesday after a report that Apple Inc.'s (AAPL) top deal maker met
with the car company's CEO, Elon Musk, last year as part of its
quest to snap up companies to fuel growth. Also, R.W. Baird
analysts raised their price target on Tesla to $215. Apple shares
were up 0.8%.
BlackBerry Ltd. (RIMM) was up 6.7% following news Friday that
billionaire fund manager Dan Loeb took a stake in the company as
part of his investment in struggling device makers.
FBR & Co. also upgraded BlackBerry's stock to market perform
from underperform, with analyst Scott Thompson writing in a note:
"We expect the company's liquid assets and early positive momentum
could limit downside in shares in the near term."
Prana Biotechnology Ltd. (PRAN) soared 45% after the
pharmaceutical company said it met the endpoint for one phase of a
clinical study testing its treatment for Huntington's disease.
After hours: Herbalife
Herbalife (HLF) is due to report fourth-quarter results after
the market close and is expected to post earnings of $1.25 a share.
Herbalife said earlier this month that it plans to offer $1 billion
in convertible notes and use the proceeds to buy back shares.
Shares rose 2.6% ahead of results.
Overseas: Bank of Japan boost
In Asia, Japan's Nikkei 225 index rallied 3.1% after the Bank of
Japan said it would double incentives designed to increase bank
lending. Other Asian markets closed mixed.
European stock markets traded broadly lower and stayed in
negative territory after a disappointing reading on German economic
sentiment. Gold prices edged higher while the dollar and oil prices
rose.
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