Wall Steet retreats on Iraq worries as data boost fades
US stocks fell today as early enthusiasm from economic data faded and concerns about the violence in Iraq gave investors a reason to sell and book some profits, driving the Dow to its biggest drop in over a month.
In the latest signs of improving economic conditions, consumer confidence surged more than expected in June, while new home sales in May rose more than anticipated. The data offered the latest evidence that the economy has regained momentum after stalling during harsh winter conditions.
The S&P 500 climbed to 1,968.17, another intraday record, and then turned lower around midday. The benchmark index had rallied for six straight days before ending Monday's session slightly lower. The Dow suffered its biggest drop since May 20.
The market's gains evaporated in the afternoon on concerns about an escalation of the conflict in Iraq. US Secretary of State John Kerry urged leaders of Iraq's autonomous Kurdish region today to stand with Baghdad in the face of a Sunni insurgent onslaught that threatens to destroy the country.
The Consumer Confidence Index for June hit its highest level since January 2008, according to the Conference Board, a private industry group. New home sales jumped 18.6 percent in May to a six-year high of a seasonally adjusted rate of 504,000 units, the Commerce Department said. The PHLX Housing Index rose 0.6 percent.
The Dow Jones industrial average fell 119.13 points or 0.7 percent, to end at 16,818.13. The S&P 500 lost 12.63 points or 0.64 percent, to 1,949.98. The Nasdaq Composite dropped 18.32 points or 0.42 percent, to 4,350.36.
Declining stocks outnumbered advancing ones on the New York Stock Exchange by 1,920 to 1,130, while on the Nasdaq, decliners beat advancers 1,863 to 766.
European shares lost ground with Belgian retailer Colruyt among the biggest fallers on downbeat earnings, while the broader market was unable to gain traction from new signs of corporate takeover activity.
Colruyt fell 3.2 percent to a 2-1/2 month low in brisk trade as it warned of a difficult year ahead after posting a slight drop in profits.
"They have a good strategy but the market is really against them. Competitors are also focusing on volumes, with very low food inflation," Bank Degroof analyst Hans D'Haese said.
The Belgian supermarket sector has been fiercely competitive over the past few quarters, partly due to Dutch rival Ahold's Albert Heijn entering the market and German hard discounters Aldi and Lidl gaining ground.
Trading volume in Colruyt was at twice its 90-day daily average. The broader FTSEurofirst 300, meanwhile, traded only around three-quarters of its average volume - with the index down 0.1 percent at 1,386.75 points, retreating from a 6-1/2 year high hit last week.
In Japan, the Nikkei share average eked out small gains to hit a 5-month closing high as the focus in domestic markets turned to Prime Minister Shinzo Abe's release later in the day of his much-anticipated policy initiatives to boost growth.
The Nikkei ended 0.1 percent higher at 15,376.24, having erased earlier losses, though it stopped short of today's intraday high of 15,442.67.
The broader Topix also ticked up 0.1 percent to 1,268.50 while the new JPX-Nikkei Index 400 also gained 0.1 percent to 11,542.9.