July 22, 2024

Markets Stumble on Economic Data

The downward trend was a complete reversal from Tuesday, when the three main indexes closed more than 1 percent higher, with the Dow Jones industrial average recording its biggest gain so far this month and raising hopes for a turnaround after six weeks of losses.

But on Wednesday, major protests in Greece over austerity measures renewed concerns about Europe’s debt troubles, and the United States government and Federal Reserve laid out new data on consumer prices, regional manufacturing and industrial production that generally failed to meet the forecasts of analysts. “We are pretty much giving back everything we got yesterday and more,” said Lawrence Creatura, a portfolio manager at Federated Investors. “Today the market just can’t escape the undertow of deteriorating economic data and political events.”

The euro, oil prices and Treasury yields also fell sharply on Wednesday.

“There is enough negative data that came out of the U.S. and the situation in Europe to warrant a conservative tone in the markets,” said Quincy Krosby, a market strategist for Prudential Financial. “The data underscores a soft patch, and the Greek issue has deteriorated.”

After having lost more than 200 points at one point during the day, the Dow Jones industrial average closed down 178.84 points, or 1.48 percent, to 11,897.27. The Standard Poor’s 500-stock index fell 22.44 points, or 1.74 percent, to 1,265.43 and the Nasdaq composite index average was lower by 47.26 points, or 1.76 percent to 2,631.46.

A Federal Reserve regional report for New York State showed a decline in both manufacturing activity and optimism for June. Nationally, consumer prices crept up in May at the slowest pace so far this year, according to government figures, and industrial production rose 0.1 percent last month, after no growth in April because of the Mississippi River flooding and the effects on business related to Japan, analysts said.

In Greece, thousands of people protested austerity measures, while Prime Minister George Papandreou proposed to step down so that his Socialist party could form a coalition government with the center-right opposition, but only if it would support a new bailout for the debt-ridden country.

Peter Cardillo, the chief market economist for Avalon Partners, said that equities were undergoing a technical correction that he predicted could be followed by a consolidation.

“Yesterday we got a little bit of good news and the market oversold,” he said. “Now the bad news comes again. So the technical correction is back in full force.”

All of the sectors of the broader market were lower by 1.24 percent or more, with financials and materials recording the heaviest declines at more than 2.3 percent declines.

Crude oil took a tumble, falling $4.41 to $94.96 a barrel for July delivery on the New York Mercantile Exchange.

Mr. Cardillo also noted that the Greece debt troubles were overshadowing other countries, as Moody’s Investors Service placed three of the largest French banks on review for a possible downgrade on concerns about their exposure to Greek debt.

“That will just keep the wall of worries on the front burners,” he said. “It is part of the picture, but is it the real reason?” he asked, referring to the market dive. “No.”

Article source: http://feeds.nytimes.com/click.phdo?i=63eb3c11599aab0691e70277dce53350

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