NEW YORK (AP) — U.S. stocks were falling for a second day in mid-afternoon Tuesday. Oil prices dropped further and the head of the International Monetary Fund sounded downbeat on the outlook for the world economy.
Disney fell after the company’s expected successor to CEO Bob Iger announced he was leaving the company. Allergan plunged after the Treasury Department announced new tax rules that would make its merger with Pfizer more difficult.
KEEPING SCORE: The Dow Jones industrial average lost 64 points, or 0.4 percent, to 17,672 as of 2:40 p.m. Eastern. The Standard & Poor’s 500 index fell 14 points, or 0.7 percent, to 2,052 and the Nasdaq composite fell 29 points, or 0.6 percent, to 4,863.
GLOOMY OUTLOOK: Christine Lagarde, the head of the IMF, warned in a speech that “the recovery remains too slow, too fragile.” She said the world economy isn’t in a crisis but that slow growth risks becoming ingrained as a “new mediocre.” She noted the outlook for the next six months has weakened, suggesting the IMF may be revising its forecasts lower.
GLOBAL DECLINE: European and Asian markets closed broadly lower. Japan’s benchmark Nikkei 225 index lost 2.4 percent, hit hard by a rise in the yen. South Korea’s Kospi fell 0.8 percent and Hong Kong’s Hang Seng sank 1.6 percent. In Europe, Germany’s DAX fell 2.6 percent, France’s CAC-40 fell 2.2 percent and the U.K.’s FTSE 100 fell 1.2 percent.
WAITING ON EARNINGS: After last month’s big rally, investors are in wait-and-see mode until they start getting quarterly results from companies, strategists say. Earnings season starts next week with Alcoa, the aluminum company, as well as the big banks like JPMorgan Chase.
“The market has been expected this quarter’s earnings to be lousy so if earnings come in better than expected, it might provide some support to the market,” said Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute.
THE TAX MAN COMETH: Allergan fell $42.42, or 15 percent, to $235.02. The U.S. Treasury Department announced new tax rules to discourage what are known as corporate inversions, which is when a U.S. company mergers with a foreign company for tax purposes. Allergan was currently in the process of doing an inversion with U.S. drug giant Pfizer. Shares of Pfizer rose 72 cents, or 2.3 percent, to $31.43.
LET (HIM) GO, LET (HIM) GO: Disney fell $1.60, or 1.6 percent, to $97.08. The media giant said late Monday that Tom Staggs, the heir apparent to the company’s current CEO, would step down from the company. Iger said he plans to retire in 2018.
ENERGY: Benchmark U.S. crude edged up 19 cents to close at $35.89 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, rose 18 cents to close at $37.87 a barrel in London.
BONDS, CURRENCIES: U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 1.73 percent from 1.76 percent. The euro inched down to $1.1384 from $1.1397, while the dollar fell to 110.45 yen from 111.26 yen.