NEW YORK -- U.S. stocks dropped Tuesday as investors weighed company news and the latest report on consumer prices.
Signs that the dollar could resume its recent surge also made investors nervous.
The Standard & Poor's 500 index fell 12.92 points, or 0.6 percent, to 2,091.50 Tuesday. The Dow Jones industrial average slipped 104.90 points, or 0.6 percent, to 18,011.14. The Nasdaq composite fell 16.25 points, or 0.3 percent, to 4,994.73.
The stock market has drifted lower for two straight days. The declines follow a rally in the market last week when Federal Reserve policymakers surprised investors by suggesting they were in no hurry to raise interest rates. Those low rates have helped power a six-year bull run for stocks.
"We're in something of a holding pattern as markets continue to digest all that's going on," said Kristina Hooper, U.S. investment strategist at Allianz Global Investors.
Stocks were little changed throughout the morning before drifting lower in the afternoon.
The slump in stocks coincided with a rally in the dollar. The U.S. currency had started the day lower against the euro before erasing those losses.
The dollar index, which measures the strength of the U.S. currency against a basket of others such as the euro and the Japanese yen, has climbed 15 percent in the past six months.
That rise has already weighed on the earnings of companies such as Coca-Cola and Caterpillar that rely on overseas sales for a large part of their earnings. S&P 500 companies start reporting results for the first quarter next month.
In other economic news, a modest rebound in gasoline prices and broad gains in other categories lifted the consumer price index for the first time in four months. The index rose 0.2 percent in February, the Labor Department said Tuesday, after dropping 0.7 percent the previous month.
Utilities declined the most of the 10 industry sectors in the S&P 500. They are the worst-performing group in the index this year, falling 5.8 percent.
These stocks typically pay dividends that are high relative to their companies' share prices. They were in demand last year, when government bond yields fell and investors wanted them for the level of income they were no longer able to get from bonds. Now they are less popular because many investors think the Fed will raise interest rates later this year.
"Your real vulnerability is on the stock side," said Jeff Lancaster, a principal of San Francisco-based Bingham, Osborn & Scarborough. "You can lose more money in a day in stocks than you can in a bad year on bonds."
Homebuilders were among the gainers on Tuesday after the Commerce Department said that new-home sales shot up 7.8 percent last month to a seasonally adjusted annual rate of 539,000, the strongest performance since February 2008.
PulteGroup rose 40 cents, or 2 percent, to $21.94. Beazer Homes climbed 36 cents, also 2 percent, to $17.57.
In energy trading, the price of U.S. crude rose slightly as traders anticipated the release of weekly supply information. Benchmark U.S. crude rose 6 cents to close at $47.51 a barrel in New York.
Brent crude, a benchmark for international oils used by many U.S. refineries, fell 81 cents to close at $55.11 in London.
Business on 03/25/2015