World Stock Market – May 21st 2014 …


U.S. stocks were broadly lower Tuesday, wiping out most of the gains made over the past two sessions. The retail sector under performed the broader market by a wide margin, following disappointing quarterly reports from a number of retailers. The Dow Jones Industrial Average slid 113 points, or 0.7%, to 16399, after gaining 65 points, or 0.4%, in the past two sessions. The Dow was now 1.9% below its record closing high of 16715.44 hit a week ago.

Within the Dow, Caterpillar fell 3.8% to pace decliners after reporting a sharp drop in global retail machinery sales for the three months through April. The S&P 500 index shed nine points, or 0.5%, to 1876 and the Nasdaq Composite Index dropped 23 points, or 0.6%, to 4104.

The Russell 2000 index of small-cap stocks slumped 1.2%, after rallying 1.7% over the previous two sessions. The index was now 8.9% below its March 4 record.

Although the market was weak from the open, traders said activity picked up midday after Federal Reserve Bank of Philadelphia President Charles Plosser, a noted hawk, said interest rates may have to rise sooner rather than later. The Fed has been gradually paring back on its highly stimulative bond-buying program this year, but most expect the Fed to keep short-term interest rates anchored near zero well into 2015.

The broad weakness in stocks helped support investments viewed as havens, such as Treasurys. The yield on the 10-year Treasury note slipped to 2.509%, which was just above the near seven-month low of 2.502% where it settled on Thursday. Yields fall as Treasury prices rise. And while overall activity was relatively light, traders noted that volume in some exchange-traded funds tracking Treasury prices were well above average.

Gold futures, which also attract risk-averse investors, rose 0.1% to $1,294.50, erasing an early loss of as much as 0.6%.

Crude-oil futures eased 0.2% to $102.44 a barrel. The dollar nudged higher against the euro but eased slightly against the yen.

European markets declined, with the Stoxx Europe 600 closing down 0.1%. The index has lost 1% since closing at a more than six-year high a week ago.

Asian markets closed mostly higher. China’s Shanghai Composite tacked on 0.1% and Japan’s Nikkei Stock Average advanced 0.5%.

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