Stocks Down Slightly Ahead of Data
October 06 2016 - 10:09AM
Dow Jones News
By Riva Gold
Stocks inched lower Thursday as oil cracked $50 a barrel and the
dollar strengthened.
The moves came as investors got one early window into the U.S.
labor market. Data on jobless claims indicated employers are
holding on to workers and the labor market is growing ahead of
Friday's jobs report. A strong employment report could reassure
investors that the economy remains on track, while bolstering the
case for the Federal Reserve to raise interest rates in
December.
The number of Americans applying for first-time unemployment
benefits, a proxy for layoffs, decreased by 5,000 to a
seasonally-adjusted 249,000 in the week ended Oct. 1, according to
the Labor Department. That's the smallest figure since mid-April,
when claims hit a near 43-year low.
The Dow Jones Industrial Average fell 27 points, or 0.2%, to
18254 shortly after the opening bell. The S&P 500 declined
0.1%, and the Nasdaq Composite declined 0.2%.
Elsewhere, the Stoxx Europe 600 index fell 0.2%. Banks were the
biggest 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
0.5%.
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nigh where monetary largess is withdrawn and risk assets will get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 rose to
minus 0.001% on Thursday, according to Tradeweb, while yields on
10-year U.S. Treasurys was 1.733% from 1.718%, following four
consecutive days of gains. Yields rise as prices fall.
Wall Street shares ended higher 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. U.S. crude oil was last up 1% at $50.33 a
barrel.
In currencies, the British pound fell 1% against the dollar to
$1.2636. 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 0.3% against the dollar at $1.1180, while the
dollar rose 0.4% against the yen.
Aaron Kuriloff, Harriet Torry and Tom Fairless contributed to
this article
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
October 06, 2016 09:54 ET (13:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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