While you were sleeping: Dudley sends Wall Street lower
July 3 (BusinessDesk) – Wall Street fell, giving up earlier gains, as comments by Federal Reserve Bank of New York
President William Dudley suggested the central bank might reduce monetary stimulus provided by its bond-buying program.
"I believe a strong case can be made that the pace of growth will pick up notably in 2014," Dudley told the Business
Council of Fairfield County in Stamford, Connecticut.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.62 percent, the Standard & Poor's 500 Index slid 0.34 percent and the Nasdaq Composite Index declined 0.42 percent. Earlier in the day, the S 500 had gained as much as 0.6 percent.
To be sure, Dudley said in reply to an audience question that he “wouldn’t want to rule out” asset purchases exceeding
the current monthly level of US$85 billion if the central bank were to be “surprised on the downside” by weaker economic
data, Bloomberg News reported.
Yet underpinning the view that the American economy is slowly but surely gathering strength were reports on auto sales
and new orders.
Shares of Ford Motor, last up 2.7 percent, gained on the strength of June sales new motor vehicle sales data. General
Motors also reported better-than-expected sales for last month and is now forecasting the highest rate of sales since
November 2007.
Separately, new orders for manufactured goods gained 2.1 percent in May, after rising 1.3 percent in April, according to
Commerce Department data.
The labour market is one of the Fed's key benchmarks on US economic strength, helping determine its plans for stimulus.
Chairman Ben Bernanke last month suggested the Fed would see a fall in the jobless rate to 7 percent as a target for
starting to ease pressure on the bank's stimulus pedal.
Unemployment will fall to about 7 percent in the fourth quarter, according to a Bloomberg poll of economists at five of
the world’s largest banks. The June payroll report on Friday is expected to show that the jobless rate dipped a tenth of
a percentage point to 7.5 percent.
Daniel Silver, an economist at JPMorgan in New York, told Reuters that second-quarter GDP growth "is now tracking close
to our forecast for 2.0 percent." The US economy expanded 1.8 percent in the first quarter.
In Europe, the benchmark Stoxx 600 Index finished the day with a 0.4 percent drop from the previous close. The UK's FTSE
100 slipped 0.1 percent, France’s CAC 40 lost 0.7 percent and Germany’s DAX retreated 0.9 percent.
Oil prices received a boost from concern about intensifying tension in Egypt.
West Texas Intermediate crude for August delivery climbed 1.6 percent to US$99.53 a barrel on the New York Mercantile
Exchange, after earlier touching US$99.87, the highest intraday level since September 14, according to Bloomberg News.
Trading exceeded 926,000 shares, which would be the second-most this year.
(BusinessDesk)