U.S. stocks fall the most in three weeks as dollar soars

A street sign for Wall Street hangs in front of the New York Stock Exchange

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A street sign for Wall Street hangs in front of the New York Stock Exchange May 8, 2013. REUTERS/Lucas Jackson/Files

By Tanya Agrawal

(Reuters) – U.S. stocks recorded their steepest fall in three weeks in morning trading on Tuesday as positive economic data added to the gains in the dollar and sent it soaring to a one-month high. The dollar was hovering at an eight-year high against the yen and a one-month peak against a basket of other big currencies. “A strong dollar is going to hurt exports and the revenue line of companies, which wasn’t strong to begin with,” said Rick Fier, director of trading at Conifer Securities in New York. The overall economy is gradually firming, with reports on Tuesday showing business investment spending plans increasing solidly in April, consumer confidence perking up this month and house prices extending gains in March. The buoyant data comes after Federal Reserve Chair Janet Yellen said on Friday that the central bank could raise interest rates this year if the economy keeps improving as expected. The comments kept the likelihood of a September rate increase high.
Yellen’s comments and the dollar’s rise pushed the monthly gain for each of the three major U.S. stock indexes to below 2 percent in the past two trading sessions. At 11:01 a.m. ET (1501 GMT) the Dow Jones industrial average was down 183.94 points, or 1.01 percent, at 18,048.08, the S&P 500 was down 20.4 points, or 0.96 percent, at 2,105.66 and the Nasdaq Composite was down 57.53 points, or 1.13 percent, at 5,031.83. All 10 major S&P 500 sectors were lower in early trading, with the materials index’s 1.24 percent fall leading the way. Apple fell 1.2 percent to $130.88 and was the biggest drag on the S&P 500 and the Nasdaq. Charter Communications’ shares were down 0.8 percent to $174.15 after it agreed to buy Time Warner Cable for $55.8 billion. Time Warner Cable rose 3.9 percent to $177.99, well below Charter’s cash and stock offer of $195.71. First Solar fell 7.5 percent, the biggest on the S&P, to $50.91 after RBC downgraded the solar panel maker’s stock to “underperform” from “sector perform”. LivePerson shares were up 13 percent at $10.11 after an Israeli website reported software provider Nice Systems was in talks to acquire the chat software firm. Nice was down 3.7 percent at $62.64. Declining issues outnumbered advancers on the NYSE by 2,422 to 498, for a 4.86-to-1 ratio on the downside. On the Nasdaq, 2,075 issues fell and 543 advanced for a 3.82-to-1 ratio favoring decliners. The S&P 500 showed four new 52-week highs and seven new lows, while the Nasdaq recorded 36 new highs and 53 new lows.

(Editing by Savio D’Souza)