US stocks fall; Rite Aid, Starwood surge on takeover talk

Shares of pharmacy chain Rite Aid and Starwood Hotels bolted higher Tuesday on reports of possible takeover bids, but the broader market declined on mixed earnings and lackluster economic data.

The Dow Jones Industrial Average fell 41.62 points (0.24 percent) to 17,581.43.

The broad-based S&P 500 dipped 5.29 (0.26 percent) to 2,065.89, while the tech-rich Nasdaq Composite Index slipped 4.56 (0.09 percent) to 5,030.15.

Rite Aid surged 42.6 percent after the Wall Street Journal reported Walgreens Boots Alliance was in advanced talks to acquire its smaller rival for up to $10 billion as soon as Wednesday. Walgreens Boots rose 6.4 percent.

The Journal also reported that three Chinese firms were interested in bidding for hotel chain Starwood, valued by the market at about $12 billion. Starwood shares jumped 9.1 percent.

But economic data further diminished the chances the Federal Reserve will move on Wednesday to lift interest rates after a two-day policy meeting.

The Conference Board said an index of consumer confidence fell to 97.6 in October from 102.6 in September on a gloomier outlook for the economy.

New US durable goods orders fell for a second straight month in September, by 1.2 percent, the Commerce Department said.

Dow member IBM lost 4.0 percent as it disclosed that it is under investigation by US securities regulators over its accounting for revenue for transactions in the US and Britain. The tech giant said it was cooperating with the probe.

Large pharma companies gained after reporting earnings above analyst expectations: Merck added 1.1 percent, Pfizer 2.4 percent, and Bristol-Myers Squibb 3.5 percent.

UPS lost 2.9 percent as revenues for the third quarter of $14.24 billion came in about $200 million below analyst expectations. The company described the economic environment as "uneven".

Ford tumbled 5.0 percent as third-quarter earnings per share came in at 45 cents, two cents below analyst expectations. Net income more than doubled to $1.9 billion. An RBC Capital Markets note cited weaker results in the Asia Pacific markets as a reason for the earnings miss.

Cummins, which manufacturers diesel and natural gas engines, slumped 8.7 percent as it announced it would cut up to 2,000 jobs due to the business slowdown. Sales are particularly bad in Brazil and China, the company said.

The yield on the 10-year US Treasury fell to 2.04 percent from 2.06 percent, while the 30-year declined to 2.86 percent from 2.87 percent Monday.