News Column

Stocks May Come Under Pressure On Troubling Data - US Commentary

June 17, 2014

WASHINGTON (Alliance News) - Following the release of some troubling economic data, stocks are likely to move to the downside in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 39 points.

The downward momentum for the markets comes on the heels of the release of a pair of reports showing a bigger than expected drop in housing starts and a bigger than expected increase in consumer prices.

The Commerce Department released a report showing that housing starts pulled back by more than expected in the month of May after surging higher in the previous month.

The report said housing starts fell 6.5% to an annual rate of 1.001 million in May after jumping 12.7% to a rate of 1.071 million in April. Economists had expected starts to drop to a rate of 1.030 million.

Additionally, the Commerce Department said building permits dropped 6.4% to an annual rate of 991,000 in May from the downwardly revised April rate of 1.059 million.

A separate report from the Labor Department showing that consumer prices rose more than expected in May has raised some concerns about the outlook for inflation.

The Labor Department said its consumer price index rose by 0.4% in May after climbing by 0.3% in April. Economists had expected the index to edge up by about 0.2%.

Core consumer prices, which exclude food and energy prices, increased 0.3% in May after rising by 0.2% in the previous month. Core prices had also been expected to tick up by 0.2%.

Worries about the ongoing conflict in Iraq may also generate some negative sentiment amid news that Sunni insurgents continue to advance toward Baghdad.

Nonetheless, trading activity is likely to remain somewhat subdued as traders look ahead to the Federal Reserve's monetary policy announcement Wednesday afternoon.

While the Fed is widely expected to announce another USD10 billion reduction in the pace of asset purchases, traders are likely to focus more on the language of the accompanying statement and the outlook for interest rates.

Along with the statement, the Fed is due to provide an update to its economic projections and Fed Chair Janet Yellen is scheduled to hold a press conference.

Stocks showed a lack of direction throughout the trading day on Monday as trader weighed worries about the deteriorating security situation in Iraq against a batch of upbeat US economic data. The choppy trading came on the heels of the pullback seen last week.

The major averages bounced back and forth across the unchanged line before closing slightly higher. The Dow ticked up 5.27 points or less than a tenth of a % to 16,781.01, the Nasdaq edged up 10.45 points or 0.2% to 4,321.11 and the S&P 500 inched up 1.62 points or 0.1% to 1,937.78.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan'sNikkei 225 Index rose by 0.3%, while Hong Kong'sHang Seng Index dropped by 0.4%.

The major European markets have also turned mixed on the day. While the UK'sFTSE 100 Index has edged down by 0.1%, the French CAC 40 Index and the German DAX Index are up by 0.2% and 0.1%, respectively.

In commodities trading, crude oil futures are sliding USD0.47 to USD106.43 a barrel after edging down USD0.01 to USD106.90 a barrel on Monday. Gold futures are falling USD13 to USD1,262.30 an ounce. On Monday, gold rose USD1.20 to USD1,275.30 an ounce.

Among currencies, the US dollar is trading at 102.19 yen compared to the 101.83 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at USD1.3546 compared to yesterday's USD1.3594.

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Source: Alliance News

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