By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
U.S. trade deficit narrows to $41.5 billion in June
NEW YORK (MarketWatch) -- U.S. stocks opened lower on Wednesday,
as failed mergers, geopolitical tensions and downbeat European
economic news triggered another flight to safe assets.
U.S. Treasurys rallied, gold futures jumped 1.8% above $1,300
per troy ounce, while global equities fell.
The S&P 500 (SPX) opened 7.8 points, or 0.4%, lower at
1,912.41. The Dow Jones Industrial Average (DJI) dropped 50 points,
or 0.3%, to 16,377.97. The Nasdaq Composite (RIXF) began the
session down 25 points, or 0.6%, to 4,326.13.
Follow MarketWatch's live blog of today's stock-market
action.
In today's sole economic news, the U.S. trade deficit shrank in
June, largely because imports of petroleum fell to the lowest level
since late 2010, however investor reaction was muted.
Meanwhile, Dallas Federal Reserve President Richard Fisher said
after the close of Wall Street's session that the central bank may
need to hike rates sooner than expected, if data continues to be as
strong as the July Institute for Supply Management's service-sector
index. The index reached the highest level since Dec. 2005 on
Tuesday.
Also read: Here is when Fed officials forecast an interest-rate
hike
European tension
News that Italy unexpectedly fell back into recession in the
second quarter weighed on European stock, which were down
sharply.
Already rattled by Russia-Ukraine fears, the Stoxx 600 index
fell 1.4%, while stocks in Italy sank 3%. Other data showed German
manufacturing orders dropping a surprising 3.2% in June on an
adjusted basis, as geopolitical worries held back orders. The
German DAX 30 index dropped 1.5%.
Escalating tension between Russia and Ukraine resulted in a
selloff on Wall Street on Tuesday. On Wednesday, Poland's prime
minister said the risk of an invasion of Ukraine by Russia has
intensified.
In addition, Russian President Vladimir Putin told his
government to prepare retaliatory measures against sanctions by the
U.S. and Europe.
"With the Dow Jones brushing the 200-day moving average for the
first time since the end of January, there will be a lot of nervous
bulls out there," said Chris Beauchamp, market analyst at IG, in a
note. (Read more on why stocks are down in Wednesday's Need to Know
http://www.marketwatch.com/story/walgreen-to-buy-remaining-stake-in-alliance-boots-2014-08-06-61035145.)
Jitters carried over into Asia, where the Nikkei 225 index slid
1%. In other markets, Gold prices (GCU4) remained firm, while oil
(CLU4) held steady ahead of inventory reports due later, and the
dollar traded choppy.
Groupon, Time Warner, Sprint on the move
Shares of Groupon (GRPN) slid 17% after the daily-deals company
posted disappointing results late Tuesday. Groupon may not be
bargain stock it seems
Meanwhile, Time Warner Inc. (TWX) shares sank after 21st Century
Fox Inc. (NWSA) said late Tuesday that it was yanking its proposal
to buy the company.
Sprint (S) shares sank after it ended its pursuit of T-Mobile US
Inc. (TMUS) and would replace Chief Executive Dan Hesse with
billionaire entrepreneur Marcelo Claure, who is untested as a
wireless operator, The Wall Street Journal reported. Sprint shares
slid 18%.
Shares of Walgreen Co.(WAG) sank 14% after the company said it
will buy the remaining 55% of Alliance Boots GmbH that it doesn't
already own. The drugstore also said it will keep headquarters in
the U.S., news that will disappoint a group of investors trying to
persuade the company to relocate its headquarters to tax-friendly
Switzerland. Read about more notable stock moves here.
More must-reads from MarketWatch:
The U.S. pump-and-dump
How you'll know if it's time for a market crash
Preparing for a Fed change of heart
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