Stocks Down Slightly Ahead of Data -- Update
October 06 2016 - 09:04AM
Dow Jones News
By Riva Gold
Stocks inched slightly lower Thursday while the dollar advanced
ahead of key readings on the U.S. labor market.
Weekly jobless claims data is due later Thursday, ahead of
Friday's jobs report. A strong employment report could reassure
investors that the economy remains on track, but also bolster the
case for the Federal Reserve to raise interest rates in
December.
Futures pointed to a 0.2% opening loss for the S&P 500,
while the Stoxx Europe 600 index fell 0.3%.
Banks were the only gainers in Europe, while the real estate
sector -- which tends to perform best in a period of
ultralow-interest rates -- was the worst performer.
Gold fell to a three-month low as the WSJ Dollar Index rose
0.3%.
Investors remain divided on the prospect of higher rates this
year.
"The Fed is walking a tightrope," said Neil Mellor, currency
strategist at BNY Mellon. Following recent speeches by U.S. Federal
Reserve officials and stronger-than-expected economic data, some
investors are thinking that "perhaps the moment of reckoning is
nigh where monetary largess is withdrawn and risk assets will get
hit," he said.
Federal Reserve Bank of Richmond President Jeffrey Lacker said
on Wednesday that current economic conditions provide a "strong
case" to raise short-term interest rates "more rapidly."
Futures markets suggest investors aren't fully convinced that
will happen in December, currently pricing a 36% chance of no
change, according to Fed-fund futures tracked by CME Group.
Meanwhile, minutes from the European Central Bank's last meeting
were also in focus following recent concerns among investors about
the end of its program of quantitative easing.
European Central Bank policy makers warned at their September
meeting of "increasing challenges" in sourcing bonds its
quantitative easing program, and hinted that the program could be
expanded again.
Bonds sold off earlier in the week following a media report that
the ECB might begin tapering, which the central bank subsequently
denied. The yield on the 10-year German government bond fell
slightly to minus 0.028% on Thursday, while yields on 10-year U.S.
Treasurys was little changed at 1.711% from 1.718%, following four
consecutive days of gains. Yields move inversely to prices.
Wall Street shares ended higher on Wednesday, bolstered by a
climb in oil prices and upbeat data on the U.S. services sector.
Oil prices reached their highest settlement value since June on
Wednesday after data showed that U.S. stockpiles fell for a fifth
consecutive week. Brent crude oil was last up 0.6% at $52.16 a
barrel.
In currencies, the British pound fell 0.8% against the dollar to
$1.2658. From here, "It's just a question of how far it can fall,"
Mr. Mellor said, given rising concerns about the U.K.'s future
access to the single market.
The euro was down 0.2% against the dollar at $1.1185, while the
dollar rose 0.1% against the yen.
-Harriet Torry, Tom Fairless and Katherine Dunn contributed to
this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
October 06, 2016 08:49 ET (12:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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