Wall Street Lower on Weak U.S. Data, Awaits Italian Debt Auction

Devan Biswas
13 Jun, 2012
New York City

U.S. indexes failed to hold on to marginal gains and dropped 1% in the afternoon. Retail sales declined for the second month in a row and investors worried about the Italian debt auction tomorrow. Crude oil fell and gold rose.

[R]4:25 PM New York – U.S. indexes failed to hold on to marginal gains and dropped 1% in the afternoon. Retail sales declined for the second month in a row and investors worried about the Italian debt auction tomorrow. Crude oil fell and gold rose.[/R]

U.S. stocks traded lower after retail sales fell and producer prices declined more than estimated in May and borrowing costs in Italy and Spain jumped. Investors also focused on the Greek election outcome, meeting of G20 leaders next week and central bankers meeting next week in the U.S. and in Japan.

Stocks were under pressure after retail sales declined for the second month in a row after adjusting for seasonality and excluding certain large items. The second monthly decline put investors on the defensive. In addition, the International Energy Agency cut its oil demand growth forecast for 2012.

Nervous traders also focused on the rising debt yields of Italy and worried about the second auction of longer dated debts tomorrow.

In merger news, Johnson & Johnson received U.S. regulatory approval for its proposed acquisition of Swiss-based Synthes in a $19.7 billion deal. The computer maker, Dell said it plans to cut $2 billion of costs over the next three years.

European markets traded lower ahead of Greek elections on Sunday. Yields on Spanish and Italian bonds jumped at a debt auction of shorter term maturities. Spanish apparel retailer Inditex lifted its quarterly outlook as cited sales growth in China.

Stocks in Tokyo traded higher in cautious trading supported by the purchases from Bank of Japan. Calendar of meetings dominated market sentiment and investors sought safety in defensive stocks. Machinery orders in Japan rose 5.7% in April.

Australian stocks turned negative on the global economic slowdown worries. Domestic housing market remains vulnerable and soft commodities prices also weighed on the market sentiment. Whitehaven Coal said it received an offer to go private.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bonds decreased to 1.60% and 30-year U.S. bonds edged advanced to 2.71%.

The U.S. dollar edged up 0.6% to $1.2579 to one euro and gained against the Japanese yen to 79.36 in New York trading.

Immediate delivery futures of Texas crude oil decreased $1.01 to $82.31 a barrel and Brent crude futures fell 29 cents to $96.85. Futures of natural gas decreased 3 cents to $2.19 per mbtu and gasoline price decreased 0.2 cents to 264.83cents a gallon.

In metals trading, copper decreased 2.5 cents to $3.31 per pound, gold increased $4.10 to $1,617.90 per ounce and silver fell 15 cents to $28.75.