Stocks fall on Fed chief Powell remarks, Iran tensions, weak tech shares
Technology shares Tuesday helped drag down major indexes of U.S. stocks, already struggling on concerns over tensions with Iran and comments by the head of the Federal Reserve.
And in another sign of weakening investor sentiment, the yield on the benchmark 10-year Treasury fell below 2 percent. Bond yields, or interest rates, move in the opposite direction of bond prices.
The latest U.S. sanctions by President Trump on Iran drew a sharp rebuke from the Islamic Republic on Tuesday, with Iranian President Hassan Rouhani calling the economic crackdown “outrageous and idiotic.”
Tensions between Tehran and Washington heightened last week after an Iranian missile shot down an unmanned U.S. spy drone over the Strait of Hormuz.
Investors are looking toward the upcoming U.S.-China trade talks to help reduce tensions of a trade war that is damaging the global economy.
Later this week, Trump and Chinese President Xi Jinping are expected to meet at the G-20 summit in Japan.
Federal Reserve Chairman Jerome Powell seemed to take a subtle swipe at Trump during a speech on Tuesday in New York, warning of “short-term political pressure” that can damage the U.S. central bank’s independence.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 37986.4 | +211.02 | +0.56% |
| SP500 | S&P 500 | 4967.23 | -43.89 | -0.88% |
| I:COMP | NASDAQ COMPOSITE INDEX | 15282.009722 | -319.49 | -2.05% |
“Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests,” Powell said during a speech at the Council on Foreign Relations. “Central banks in major democracies around the world have similar independence.”
Powell’s speech comes on the heels of last week’s Federal Open Market Committee two-day policy-setting meeting, during which Trump urged the Fed to lower interest rates. However, policymakers voted 9-1 to keep the benchmark federal funds rate steady at 2.25 percent to 2.5 percent, although heavily implied there could be a rate cut this year.
Major equity indexes were down before Powell spoke, but fell further as he spoke.
Technology shares struggled.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GOOGL | ALPHABET INC. | 154.09 | -1.92 | -1.23% |
| AMZN | AMAZON.COM INC. | 174.63 | -4.59 | -2.56% |
| FB | n.a. | n.a. | n.a. | n.a. |
AbbVie announced Tuesday it inked a deal to buy Allergan for about $63 billion.
The pharmaceutical company will be acquired in a cash and stock deal, with the transaction equity value based on AbbVie’s closing stock price of $78.45 on Monday.
Lennar Corp rose after the No. 2 U.S. homebuilder reported a 35.8 percent rise in quarterly profit, selling more as mortgage rates fell.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ABBV | ABBVIE INC. | 166.41 | +1.75 | +1.06% |
| LEN | LENNAR CORP. | 150.18 | -2.32 | -1.52% |
| AGN | n.a. | n.a. | n.a. | n.a. |
Crude oil prices fell 0.21 percent to $57.78 per barrel, and gold extended recent gains to $1,428.30, a 0.71 percent increase.
In economic news, the Conference Board Consumer's Confidence Index fell this month to 121.5, the business research group said on Tuesday, down from 131.3 in May. It was the first time in three months that consumer confidence fell in the U.S.
The Commerce Department said Tuesday new home sales dropped 7.8 percent to a seasonally adjusted annual rate of 626,000 units last month, the lowest level since December. April's sales pace was revised up to 679,000 units from the previously reported 673,000 units.
In Asia, China's Shanghai was down 0.87 percent, snapping a six-session winning streak. Hong Kong's Hang Seng fell 1.2 percent and Japan's Nikkei closed down 0.4 percent.
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European markets closed mostly lower. London's FTSE added 0.1 percent. Germany's DAX lost 0.4 percent and France's CAC slipped 0.1 percent.