Stocks drop on Iraq worries
NEW YORK — U.S. stocks fell on Tuesday 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. On Tuesday, 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. U.S. Secretary of State John Kerry urged leaders of Iraq’s autonomous Kurdish region on Tuesday to stand with Baghdad in the face of a Sunni insurgent onslaught that threatens to destroy the country.
“The Iraq thing is probably getting more focus than anything else,” said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco.
“You really had the market go up in almost a straight line since June 12, so at the top of the range here, I’m not surprised to see a little bit of a pullback.”
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.
In another snapshot of the housing sector, the S&P/Case-Shiller composite index showed single-family home prices rose less than expected in April.
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.
Walgreen Co. shares fell 1.7 percent to $72.48 after the largest U.S. drugstore chain reported its third-quarter results. Walgreen withdrew its 2016 profit and revenue forecasts, citing the need to work out several aspects of its planned acquisition of Alliance Boots Holdings Ltd.
Biotech shares were a bright spot, buoyed by a 40.4 percent surge in Vertex Pharmaceuticals Inc. to $93.53 on heavy volume. The Nasdaq Biotech Index climbed 1 percent.
Vertex said a combination of drugs designed to treat cystic fibrosis succeeded in improving lung function in a pair of closely watched late-stage clinical trials.
Volume was modest, with about 5.69 billion shares traded on U.S. exchanges, slightly above the 5.61 billion average so far this month, according to data from BATS Global Markets.
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.