NEW YORK (AP) – The stock market headed lower Wednesday following a drop in durable goods orders and news of a big merger between Kraft and Heinz.
KEEPING SCORE: The Dow Jones industrial average was down 164 points, or 0.9 percent, to 17,847 as of 12:19 p.m. Eastern time.
The Standard & Poor’s 500 index sank 15 points, or 0.7 percent, to 2,077, while the Nasdaq composite fell 72 points, or 1.4 percent, to 4,923.
LONG VIEW: Jack Ablin, chief investment officer at BMO Private Bank, said he thinks it’s going to be tough for the market to push higher. Major indexes trade near all-time highs reached earlier this month, even though analysts expect earnings to shrink in the first half of the year. That makes the typical stock look pricey.
“We’re going to have a difficult time continuing to make new highs if the underlying economy isn’t following the direction of the market,” he said. “At some point we’re going to hit the intersection of reality and expectations.”
KETCHUP AND HOT DOGS: H.J. Heinz and Kraft Foods announced plans to merge in a deal that would create one of the world’s largest food companies. The merger was engineered by Heinz’s owners, Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital, and still needs a nod from federal regulators and Kraft shareholders. Kraft’s stock shot up $23.62, or 39 percent, to $85.
SLOWING: Orders to U.S. factories for long-lasting manufactured goods fell in February for the third time in four months. The Commerce Department reported that orders for durable goods dropped 1.4 percent, as demand for commercial aircraft, cars and machinery waned.
RESPONSE: “You can put this durables report into your Surprise Index as it missed market expectations,” said Christopher Rupkey, chief financial economist at MUFG Union Bank, in a note to clients. “But more importantly it is another piece of data that shows the real GDP economy is running 2 percent and not 3 percent.”
SELF-LOVE: Merck joined the parade of companies, including Lowe’s Co, JPMorgan Chase and General Motors, that have recently announced plans to spend billions on their own shares. The drugmaker said its board authorized spending an additional $10 billion on top of the $1.7 billion already budgeted for buying back stock. Merck rose 23 cents, or 0.4 percent, to $58.87.
AROUND THE GLOBE: In China, manufacturing slumped to the lowest in 11 months, according to HSBC’s purchasing managers’ index. In Europe, a key survey showed German business confidence rose for a fifth month.
EUROPEAN MARKETS: Major indexes closed with losses across Europe. Germany’s DAX dropped 1.1 percent and France’s CAC 40 lost 1.4 percent. Britain’s FTSE 100 sank 0.5 percent.
ASIA’S DAY: Japan’s benchmark Nikkei 225 index closed with a gain of 0.2 percent, and South Korea’s Kospi rose less than 0.1 percent. In China, Hong Kong’s Hang Seng climbed 0.5 percent while the Shanghai Composite Index on the mainland lost 0.8 percent. Australia’s S&P/ASX 200 finished up less than 0.1 percent, just off its highest level in more than seven years.
CRUDE: Benchmark U.S. crude rose 85 cents to $48.37 a barrel in New York. Crude oil is down 7 percent this month after losing half its value over the past year.
CURRENCIES: The dollar slipped to 119.45 yen from 119.75 in the day before. The euro strengthened to $1.0967 from $1.0914.