US stocks closed lower on Monday after a normally dovish Federal Reserve policymaker suggested rates could rise more aggressively than markets have priced in.
The dollar gained after normally dovish Boston Fed President Eric Rosengren said it was "surprising" that futures markets currently price in no more than one rate hike this year. He said it could prove "too pessimistic."
Markets interpreted that as suggesting that the number or imminence of rate hikes could be greater and it went against the grain of what last Tuesday Federal Reserve Chair Janet Yellen said about proceeding with caution over rate hikes.
The S&P500 ended down 0.32% at 2,066. The S&P Midcap 400 was down 0.94% at 1,437, while the S&P Smallcap 6000 closed 1.08% lower at 680.
Bourses were not helped by softer oil prices too. The US oil benchmark West Texas Intermediate was down 3.45% at $35.52 - its lowest level since early February.
Midsession
US stocks were softer at midsession on Monday after a normally dovish Federal Reserve policymaker suggested rates could rise more aggressively than markets have priced in.
The dollar gained after normally dovish Boston Fed President Eric Rosengren said it was "surprising" that futures markets currently price in no more than one rate hike this year. He said it could prove "too pessimistic."
Markets interpreted that as suggesting that the number or imminence of rate hikes could be greater.
Last Tuesday, Federal Reserve Chair Janet Yellen said the central bank would proceed with caution over rate hikes, which boosted stocks which had expected up to four rate hikes in 2016.
Following some elation over stronger-than-expected US non-farm payrolls data on Friday as well as Yellen's remarks, the S&P500 gave back some of last week's gains. The broad-based ticker was last seen down 0.09% at 2,070.
Meanwhile, the S&P Midcap 400 was down 0.52% at 1,444, led by SunEdison (NYSE:SUNE), down 49% at $0.22. On Friday, the stock fell 60% in after-hours trading after the Wall Street Journal reported SunEdison is in talks with two creditors to secure financing to fund operations during a restructuring process, citing sources close to the matter. The company announced Thursday, via a filing with the Securities and Exchange Commission, that it received a subpoena from the Justice Department demanding information tied to its failed bid to acquire Vivint Solar (NYSE:VSLR).
The S&P Smallcap 600 was down 0.48% at 684, led by Natus Medical (NASDAQ:BABY) which was 18.3% lower at $32.41 as investors punished the stock for a poorer-than-expected first quarter preliminary revenue report.
Revenue for the first quarter of 2016 is expected to be approximately $87.5mln versus previous guidance of $91.5mln to $92.5mln, excluding revenue from the Venezuela Ministry of Health contract.
"Pushouts of key orders in both our international and domestic markets led to weaker than expected revenue late in the first quarter," said Jim Hawkins, President and Chief Executive Officer ofNatus.
"In addition, we did not have any revenue associated with the Venezuela Ministry of Health contract as we did not receive any prepayments during the quarter," he added.
But on Monday there were some key gainers too. In the small-cap Russell 2000, which was down 0.23% at 1,115 the top gainer was Virgin America (NASDAQ:VA), uop 41.5% at $55.07, after the airline agreed to be taken over by Alaska Air (NYSE:ALK) in a $4bn deal.
Open
Wall Street made a low-key start to the week, though a number of big name stocks soared.
The Dow Jones was up a sliver, at 17,795, while the S&P 500 and the Nasdaq were both up just 0.01% to 2,072 and 4,915 respectively.
Virgin America Inc (NASDAQ:VA) shares jumped 40%, US$15.45 per share, to trade at US$54.45, with the news of a takeover deal as Alaska Air Group offered to pay US$4bn or US$57 per share in cash.
The merged airline would be the fifth largest carrier in the United States, according to Alaska Air.
Takeover talk also pushed Ruckus Wireless Inc (NYSE:RKUS) some 30% higher to US$13.05 as rival network hardware group Brocade Communications Systems Inc (NASDAQ:BRCD) moved to buy the group for US$1.5bn.
Brocade will pay US$14.43 to take over the group.
Troubled solar firm SunEdison Inc (NYSE:SUNE) saw another volatile day, falling 49% to just above 20 cents per share which is its close to its lowest so far.
Drugs group Edwards Lifesciences Corp (NYSE:EW) surged 12% ahead of the bell as it unveiled positive new data on its SAPIEN 3 valve for heart patients.
The company's valve replacement using SAPIEN 3 was found to provide better outcomes after a year compared to those who had endured open heart surgery.
Flexion Therapeutics Inc (NASDAQ:FLXN) were in demand after the company presented positive results from two clinical trials for its lead drug candidate, Zilretta. The results showed that Zilretta, also known as FX006, provided enduring and significant pain relief in patients with moderate to severe osteoarthritis (OA) knee pain.