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1st LD Writethru: U.S. stocks tumble amid economic data

Xinhua, May 27, 2015 Adjust font size:

U.S. stocks suffered big losses on Tuesday, as investors digested a string of data releases and Federal Reserve Chair Janet Yellen's speech.

The Dow Jones Industrial Average dropped 190.48 points, or 1.04 percent, to 18,041.54. The S&P 500 dipped 21.86 points, or 1.03 percent, to 2,104.20. The Nasdaq Composite Index slumped 56.61 points, or 1.11 percent, to 5,032.75.

U.S. new orders for manufactured durable goods in April decreased 0.5 percent to 235.5 billion U.S. dollars, roughly in line with market expectations, the Commerce Department said Tuesday. This decrease, down for two of the last three months, followed a 5.1 percent increase in March.

In a separately report, the Commerce Department said U.S. sales of new single-family houses in April 2015 were at a seasonally adjusted annual rate of 517,000, beating market consensus. This is 6.8 percent above the revised March rate of 484,000 and 26.1 percent above the April 2014 estimate of 410,000.

"This increase in new home sales will likely encourage builders and is a positive sign for the market heading into the summer, but with the various segments of the market still out of synch with one another, housing will likely remain unremarkable this year," said Sophia Kearney-Lederman, an economic analyst at FTN Financial, in a note.

Meanwhile, the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that the 10-City Composite gained 4.7 percent year over year in March, while the 20-City Composite added 5 percent.

Markets were still reflecting on Yellen's speech delivered on Friday. "If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target," Yellen said.

She noted that first quarter weakness was largely transitory, but that it would take several years for rates to return to normal.

Some analysts thought that the generally upbeat data could strengthen the case for a rate hike.

Overseas, Greek government on Tuesday turned to the balances of dormant state accounts in an effort to collect funds to repay the next International Monetary Fund loan installment on June 5, as Finance Minister Yanis Varoufakis assured there will be no credit event next week.

European equities ended sharply lower on Tuesday, with the British benchmark FTSE 100 Index falling 1.18 percent amid Greece concerns.

In corporate news, Charter Communications has agreed to buy Time Warner Cable for 55 billion dollars, finally clinching an agreement after its early 2014 bid was rejected and Comcast abandoned its offer. Shares of Time Warner Cable soared 7.26 percent to 183.60 dollars Tuesday.

U.S. markets were closed on Monday for Memorial Day. Endite