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.
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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
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 timesince 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 wouldreplace 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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(END) Dow Jones Newswires
August 06, 2014 09:36 ET (13:36 GMT)
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