While you were sleeping: lacklustre US data
The latest reports on the US economy pointed to weakness, or at least slower forward momentum, leading investors to press the brakes on Wall Street's record run.
The Philadelphia Federal Reserve Bank says its gauge of factory activity in the mid-Atlantic region dropped to minus 5.2 in May, while the Commerce Department said housing starts sank 16.5 percent to an 853,000-unit annual rate in April.
"The US economy is still struggling with lacklustre growth and the recovery is far from self-sustaining, so equity markets are looking for guidance from central banks for their liquidity high," Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co, told Bloomberg News.
A separate report showed the consumer price index dropped 0.4 percent, the biggest slide since December 2008, underpinning expectations the Federal Reserve will maintain its efforts to stoke the pace of growth in the world's largest economy.
"Inflation data was very good. It doesn't put any pressure on the Fed. Investors are confident the Fed will continue to stimulate the economy," Paul Zemsky, head of asset allocation at ING Investment Management in New York, told Reuters.
Earnings provided mixed signals. Shares of Cisco jumped, last up 13 percent, after the company reported profit that surpassed estimates. Investors also applauded Kohl's results, bolstering the department-store retailer's stock 4.6 percent.
However, shares of Wal-Mart dropped, last 2.2 percent lower, after the retailer predicted second-quarter earnings that fell short of expectations.
"They're pressured by the economy, unemployment, the increase in payroll taxes, the delay in tax returns," Bernard Sosnick, an analyst at Gilford Securities based in New York, told Bloomberg. "All these negatives coalesced in the first quarter."
The Dow Jones Industrial Average had just touched a record high of 15,302.49 earlier in the session, but ran out of steam. In afternoon trading in New York, the Dow edged 0.03 percent lower, while the Standard & Poor's 500 Index was unchanged at 1658.77. The Nasdaq Composite Index rose 0.24 percent.
In Europe, the benchmark Stoxx 600 Index ended the session nearly 0.1 percent lower from the previous close. Still, it has gained 10 percent so far in 2013. The UK's FTSE 100 and France's CAC 40 both fell 0.1 percent. Germany's DAX rose 0.1 percent.
As for the outlook for commodities, it's bleak, according to a poll by Credit Suisse. Gold will trade at $US1100 an ounce in a year and below $US1000 in five years, according to Ric Deverell, head of commodities research at the bank.
"Gold is going to get crushed," Deverell told journalists in London today, Bloomberg Businessweek reported.