US open: Stocks fall as US trade deficit widens
US stocks were in the red on Tuesday as data revealed the US trade deficit widened to a six-month high in February.
At 1522 BST, the Dow Jones Industrial Average fell 0.29% to 17,678.31, the S&P 500 dropped 0.69% to 2,051.74 and the Nasdaq declined 0.55% to 4,864.21.
The US trade deficit rose 2.6% to $47.1bn (£33.31bn) in February as a rebound in exports was offset by an increase in imports, the Commerce Department said. Economists had expected a deficit of $46.2bn.
“The widening in the trade deficit to a six-month high of $47.1bn in February, from $45.9bn, means that net exports will be a drag on first-quarter GDP growth, which we now think was around 1.5% annualised (2.0% previous),” said Steve Murphy, US economist at Capital Economics.
Service industry activity data came in more positive.
Markit’s final US business services purchasing managers' index rose to 51.3 in March from 49.7 in February and the 'flash' estimate of 51.0, back above the 50.0 mark that separates contraction from expansion. The reading was also better than the 51.0 economists had pencilled in.
ISM’s non-manufacturing services composite also beat forecasts, rising to 54.5 in March from 53.4 in February. Analysts had predicted a reading of 54.1.
Meanwhile, Chicago Federal Reserve President Charles Evans said in Hong Kong that the central bank has to be proactive and aggressive to reach its 2% target. The Fed's preferred annual measure of inflation came in flat at 1.7% in February.
In commodities, oil prices remained volatile as government data showed a surprise fall in gasoline demand in the US in January and as the market raised doubts that global crude producers would reach an agreement to freeze production at a meeting on 17 April.
Saudi Arabia said on Friday it would only freeze production if Iran follows suit. However, Iran has ruled out freezing output until its production recovers to levels seen before its sanctions.
West Texas Intermediate crude rose 0.14% to $35.75 per barrel and Brent climbed 0.15% to $37.75 at 1527 BST, reversing earlier declines.
In company news, Allergan’s shares slumped after the US Treasury Department announced new rules to curb corporate tax inversion that could impact the drugmaker’s takeover by Pfizer Inc.
Walt Disney Co. was sitting lower after revealing chief operating officer Thomas Staggs is set to leave the company.
Tesla Motors was under the cosh after the electric car maker said it failed to reach its sales goals for its Model X.
Drugstore operator Walgreens Boots Alliance dropped after reporting quarterly sales that missed analysts’ estimates.
On the upside, Olive Garden parent Darden Restaurants advanced after posting better-than-expected adjusted quarterly profit.
In currencies, the dollar rose 0.80% against the pound and increased 0.21% against the euro but fell 0.68% versus the yen.