While you were sleeping: Stocks extend decline
Feb 22 (BusinessDesk) – Wall Street extended losses for a second day amid concern the Federal Reserve's stimulus for the
US economy might end sooner than expected, while the latest data on euro zone services and manufacturing output showed a
larger-than-expected contraction.
Minutes from the latest Fed meeting called into question the size and duration of the central bank's bond-buying program
at a time when the signals about the recovery in the world's largest economy remain mixed, while the euro zone shows
signs of further trouble.
A report today showed the Fed’s Philadelphia general economic index slid to minus 12.5 in February, the lowest reading
since June, from minus 5.8 in January.
In afternoon trading in New York, the Dow Jones Industrial Average dropped 0.54 percent, the Standard & Poor's 500 Index declined 0.75 percent, while the Nasdaq Composite Index weakened 1.15 percent. The S 500 closed at a five-year high on Tuesday.
“People are taking some profits and watching to see what the next catalyst is,” Neil Massa, senior equity trader at
Boston-based John Hancock Asset Management, told Bloomberg News. “It’s a healthy sell off. We’ve gone up so much, it’s a
good opportunity to take a breather. I don’t think it’s a sign of a continuing trend.”
Earnings from companies including Wal-Mart and Safeway showed there that are plenty of reasons for the good times to
last. Better-than-expected results bolstered shares of both retailers, sending Wal-Mart up 2.7 percent, while those of
Safeway soared 13 percent.
But there were worrisome signals too. Shares of VeriFone Systems tanked, last down 39.7 percent, as sluggish demand in
Europe hurt the company's profit outlook.
Indeed, a composite index of factory and services output in the euro zone weakened to 47.3 this month from 48.6 in
January, according to Markit Economics. Economist' surveys by Bloomberg and Reuters both had forecast a reading of 49.
“A steepening rate of decline in February is a disappointment, and suggests that the euro zone is on course to contract
for a fourth consecutive quarter in the first three months of the year," Chris Williamson, chief economist at Markit,
said in a statement.
Economies differ vastly across key member states, the data showed. The difference between France and Germany is the
largest since the survey began in 1998, according to Markit.
"Germany is on course to grow in the first quarter, recovering from the 0.6 percent GDP fall seen in the fourth quarter,
possibly expanding by as much as 0.4 percent," Williamson said. "In contrast, Frances’s downturn is likely to deepen,
bringing the euro area’s second-largest member more in line with the periphery than with the now solitary-looking German
‘core’.”
Europe's Stoxx 600 Index ended the session with a 1.5 percent slide from the previous close. National key stock indexes
also dropped in London, Frankfurt and Paris, shedding 1.6 percent, 1.9 percent and 2.3 percent respectively.
Italy's key benchmark dropped 3.1 per cent as uncertainty about the outcome of this weekend's national elections
continues to rise.
The euro weakened as well, retreating 0.6 percent against the greenback, while falling 1.3 percent against the yen.
(BusinessDesk)