Iraq, oil price fears spook market

Written By limadu on Senin, 23 Juni 2014 | 23.11

dow 11:40

NEW YORK (CNNMoney)

The Dow Jones Industrial Average is more than 40 points lower heading into lunch. The S&P 500 and the Nasdaq are also down more than 0.1% each.

Many hope this could be the week the Dow cross the 17,000 mark for the first time, but it's not looking promising today. It's largely a psychological barrier, but it would be another point in the market's phenomenal bull run that saw the Dow close above 16,000 for the first time just seven months ago.

Related: What does Dow 17,000 mean, anyway?

Here are the top things to watch in today's trading:

1. Worrying signs from Europe: There's a tension in the markets between encouraging economic news in the U.S. and discouraging news in Europe after the release of manufacturing measures in America, France, Germany and the Eurozone.

Things are looking up in the U.S. America's purchasing managers index (PMI) came in above expectations and is pointing toward growth in the sector the second half of the year. Additionally, the Federal Reserve Bank of Chicago released an index of economic activity that also pointed toward growth.

In Europe, however, things are continuing to slow. France, Germany and the Eurozone all saw their PMIs come in below expectations.

"At the end of the day, stock markets are driven by profit growth, and profit growth isn't following through on the economic data," said Mark Luschini, chief market strategist for Janney Capital. He said Europe's troubles were backing into U.S. equities.

CNNMoney's Fear & Greed Index in extreme greed

2. Turmoil in the fashion industry -- Lululemon & American Apparel: Lululemon shares are bouncing this morning after the Wall Street Journal reported that the company's founder Chip Wilson hired Goldman Sachs to help him strengthen his role at the company, where he is the largest shareholder. Lululemon (LULU) shares are up around 3.5%

American Apparel (APP) shares are flat on rumors that the company make be a potential takeover target. It's the latest twist impacting the brand. Last week the company fired controversial CEO Dov Charney. Now Charney has fired back, writing a letter to the board challenging his dismissal. The company continues to struggle with its turnaround plan. The stock is trading for less than $1.

Related: American Apparel's ousted CEO fights back

3. Real estate picks up: The National Association of Realtors released data Monday showing that the pace of May existing home sales rose to 4.89 million a year, which is above the market's expectations for an annual rate of 4.73 million. Homebuilder stocks like Toll Brothers, (TOL) PulteGroup (PHM) and Lennar (LEN) are all positive.

The NAR said that May's uptick, at nearly 5%, was the fastest month-to-month growth since August 2011.

"Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year," said Lawrence Yun, the NAR's chief economist. "Moreover, sales were helped by the improving job market and the temporary but slight decline in mortgage rates."

4. Big deal for Micros: Computer giant Oracle purchased MICROS Systems (MCRS), one of its largest customers, for more than $5 billion. Micros specializes in providing software applications to the hospitality and retail sectors, and has worked with Oracle for more than 15 years. Oracle shares are flat, and Micros stock is up 3%.

Related: CNNMoney's Tech 30 index slightly higher Monday

5. Oh la la -- GE finally snags French prize: General Electric (GE) has finally closed the deal on French company Alstrom (ALSMY) to the tune of $17 billion, much more than its initial $13.5 billion bid. The French government had opposed the deal because it was concerned the merger would lead to job losses and a dilution of Alstom's French Brand. GE stock is down 1%, and Alstom's French shares closed about 4% lower.

6. Buying power in energy stocks: Wisconsin Energy (WEC) announced this morning that it will acquire Integrys Energy Group (TEG) for for $71 per share in order to increase its natural gas business and its footprint in the Great Lakes region. Wisconsin's stock is down around 2%, and Integrys shares have jumped over 13% to nearly $70.

7. BNP Paribas on verge of settlement with U.S.: The bank is on the cusp of a $9 billion settlement with the U.S. Justice Department on allegations that it did business with off-limits countries. The French bank's shares ended the day nearly flat. There are fears that the fine could hurt BNP's credit rating.

8. Oil prices: As fighting in Iraq intensifies and Israel continues launching rockets into Syria in retaliation for the killing of an Israel teen, keep an eye on oil prices. After a steady rise last week, WTI crude oil has backed away from the $107 barrier and is now down almost 0.8% for the day.

Related: Rising oil prices trigger economic growth concerns

9. International Markets: European stocks are largely down, with the FTSE 100 closing 0.36% down. Asian markets are also a mixed bag, as are Chinese stocks are doing well after the country's manufacturing sector showed its first expansion in six months. The Hang Seng fell 1.7%, but shares traded in Shenzen were up nearly 1.1%.

First Published: June 23, 2014: 10:08 AM ET


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