MW: U.S. stocks decline as wholesale prices head higher
By Donna Kardos Yesalavich, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks opened lower Tuesday, with a bigger-than-expected rise in U.S. wholesale prices and deteriorating conditions for New York manufacturers weighing on sentiment as the Federal Reserve begins its latest interest-rate meeting.
Keeping the declines in check, data showed industrial production from last month rose more than expected, while the rate at which industries used their capacity also increased more than economists had predicted. Read about industrial production.
The Dow Jones Industrial Average (INDU 10,463, -37.56, -0.36%) fell 35 points, or 0.3%, to 10,467 in early trading. Financial components American Express Co. (AXP 40.83, -0.45, -1.09%) and Bank of America Corp. (BAC 15.39, -0.24, -1.54%) weighed on the measure, off more than 1% each. Health-care components Merck & Co. (MRK 37.72, -0.05, -0.13%) and Pfizer Inc. (PFE 18.25, -0.15, -0.83%) were also weak.
The Nasdaq Composite Index (COMP 2,202, -10.00, -0.45%) declined 0.3%. The Standard & Poor's 500 Index (SPX 1,109, -4.96, -0.45%) dropped 0.4%. Its financial and telecommunications sectors led the declines. The energy sector was the only S&P 500 category in the green, boosted by a rise in crude-oil futures.
In other markets, the dollar was moving higher Tuesday, with the U.S. dollar index (DXY 76.84, +0.51, +0.66%) , representing the greenback against a basket of six other currencies, up 0.6%. Treasurys fell, with the 10-year note recently off 7/16 to yield 3.605%. Gold futures also fell. The action comes as the Federal Reserve begins deliberations on interest-rate policy.
Reports released Tuesday morning showed U.S. wholesale prices rose nearly twice as much as expected in November, while conditions for New York manufacturers deteriorated in December, following four months of improvement, according to the Federal Reserve Bank of New York's Empire Manufacturing Survey. Read more about the latest economic reports.
"The surprise weakness in the Empire survey is likely to raise concerns about the sustainability of the economic turnaround," said Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Investments. "And the market will be thinking a lot about what the Fed is doing on the first day of their meeting in Washington. We expect a lot of behind-the-scenes conversations about exit strategies but are looking for no substantive changes in the post-meeting statement tomorrow."
The action comes after U.S. stocks rose Monday, pushing the Dow to a new 2009 closing high as Abu Dhabi's $10 billion loan to Dubai and Exxon Mobil Co.'s (XOM 69.87, +0.18, +0.26%) acquisition of XTO Energy Inc. (XTO 48.10, +0.24, +0.50%) boosted sentiment. Read more about Exxon's deal for XTO.
Among companies in focus, Wells Fargo Co. (WFC 25.83, +0.34, +1.33%) became the last of the nation's biggest banks to unveil plans to repay $25 billion of government bailout funds it received at the height of the global financial crisis. Wells Fargo was up 1.1%. Read more about Wells Fargo's plans.
