Investors turned their attention back toward the state of the economic recovery and the outlook for interest rates as any euphoria surrounding the death of Osama bin Laden ran its course.
“The markets appear to be looking beyond” Bin Laden’s death, a trader at Spreadex, Andrew Sykes, said “and worries about index levels and the economic recovery are moving to center stage.”
A heap of data on the economy and corporate earnings will likely sway the stock and bond markets for much of the week, culminating in the April jobs report on Friday.
The nation’s automakers are expected to report that American sales of cars and trucks rose 19 percent in April. Americans probably more bought cars during the month because of fears that the earthquake in Japan would lead to shortages.
In early trading, the Dow Jones industrial average was up 8.93 points or 0.1 percent, while the broader Standard Poor’s 500-stock index lost 3.03 points or 0.2 percent. Nasdaq dropped 12.55 points or 0.4 percent.
In London, the FTSE 100 index was up less than 0.2 percent while the DAX in Frankfurt fell 0.5 percent. The CAC 40 in France was 0.35 percent lower.
Bond prices were up, sending yields lower. The yield on the 10-year Treasury note fell to 3.27 percent from 3.28 percent late Monday.
In the commodities markets, the oil prices fell below $113 a barrel Tuesday as a stronger dollar made crude more expensive for investors with other currencies. Crude for June delivery was down $1 at $112.52 a barrel in New York trading.
Gold, silver, corn, wheat and soybeans were all lower.
Some analysts considered Bin Laden’s death a minor issue for the oil market, and were more focused on monetary policy. The Federal Reserve chairman, Ben S. Bernanke, said last week that the United States would keep interest rates low for an extended period, comments that helped weaken the dollar.
“In a number of respects, Ben Bernanke is much more central to the future of oil prices than Osama bin Laden,” Cameron Hanover said in a report. “We have seen the impact a weaker U.S. dollar has had on oil prices.”
Earnings reports are mixed on Tuesday. Net income for the drug maker Pfizer increased by 10 percent, in part because of lower costs for production. But Pfizer, the maker of the cholesterol drug Lipitor and impotence pill Viagra, said its revenue fell slightly.
The home builder Beazer Homes USA reported a larger-than-expected loss. Beazer’s orders for new homes fell, reflecting continued weakness in the housing industry.
And the Molson Coors Brewing said its net income fell 21 percent on rising costs for ingredients and fuel.
In Europe, investors will be keeping a close watch on interest rate decisions from the European Central Bank and the Bank of England later this week. Neither is expected to change interest rates, though the European Central Bank is expected to indicate Thursday that it will follow April’s interest rate increase — the first in nearly three years — with another rise in June.
That belief has bolstered the euro currency in the last couple of months despite debt problems, most notably in Greece, Ireland and Portugal. While the European Central Bank is poised to raise interest rates again, the Federal Reserve in Washington has shown few signs that it is ready to lift its super-low interest rates. That has added to the dollar’s recent weakness against the euro.
The euro was at $1.4831 on Tuesday — just off Monday’s near 18-month high of $1.4902. Meanwhile, the dollar was 0.6 percent lower at 80.71 yen.
Interest rates were in focus in Asia earlier after India’s central bank raised its benchmark interest rate by half a percentage point, warning that persistent inflation has become a threat to growth in Asia’s third-largest economy.
India’s reserve bank, which has raised borrowing costs nine times in just over a year, warned that economic growth would slow to about 8 percent this year while inflation would remain close to 9 percent for the first half of the fiscal year.
Unsurprisingly, share prices fell and India’s Sensex index was down 2.4 percent.
Bucking the trend in Asia, mainland Chinese shares rose after markets reopened following Monday’s May Day holiday.
The Shanghai Composite Index gained 0.7 percent to close at 2,932.19, while the Shenzhen Composite Index rose 1.1 percent to end at 1,214.12. Hong Kong’s Hang Seng Index fell 0.4 percent to end at 23,633.25
Article source: http://www.nytimes.com/2011/05/04/business/04markets.html?partner=rss&emc=rss
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