U.S. Stocks in 2-day Decline, PPI Rises 0.6%

Nichole Harper
14 May, 2014
New York City

Stocks in New York declined for the second day after indexes reached to new highs. Wholesale price increase in April was the largest rise since September 2012, diminishing the risk of deflation. Market indexes in Europe dipped on renewed violence in Ukraine.

[R]12:10 PM New York – Stocks in New York declined for the second day after indexes reached to new highs. Wholesale price increase in April was the largest rise since September 2012, diminishing the risk of deflation. Market indexes in Europe dipped on renewed violence in Ukraine.[/R]

Market indexes struggled to build on the recent gains and broader averages declined.

Indexes declined for the second day in a row and halted a five-day rally that lifted the S&P 500 and the Dow to new highs. The small cap market index declined 0.8% and extended previous day loss of 1.1%.

The small cap Russell 200 index declined 8.1% from the March high as of yesterday and the S&P 500 index rebounded 4.5% from its low in April in the period, according to the data compiled by TickerPlanner.com

S&P 500 index declined 0.2% to 1,893.20 and the Nasdaq Composite Index eased 0.4% to 4,115.40.

Producer price index, a measure of wholesale prices, increased 0.6% in April from March, the Labor Department showed today. Prices increased 2.1% from a year ago month in April.

The monthly price increased was the largest since September 2012 but was in line with estimates set by economists and the expectations of the Fed. The reported price increase diminished the risk of deflation as demand across the economy improves.

World Markets

In London trading, FTSE 100 index slipped 0.1% or 6.63 to 6,866.45 and in Frankfurt the DAX index slid 0.08% or 7.94 to 9,746.49.

In Paris, CAC 40 index fell 0.05% or 2.44 to 4,502.58.

The Sensex Index fell 56.11 or 0.2% to close at 23,815.12 The CNX Nifty close unchanged at 7,108.75.

Market indexes in Tokyo eased and the yen weakened after international markets registered gains.

The Nikkei 225 Stock Average fell 19.68 to 14,405.76 and the Topix index gained 4.80 to 1,183.15.

Australian Budget Targets Debt

Treasurer Joe Hockey focused his efforts in eliminating the entire federal government debt in a decade and announced cuts in welfare spending, pensions and raised prices for fuel and medical services.

The federal government debt is estimated to peak at $264 billion in fiscal 2017 and Treasurer Hockey estimated by 2025 the government will be debt free.

Hockey also announced its plan to issue $63 billion in new Australian government bonds of which $27 billion will be used to repay maturing debt. Additional, $4 billion inflation-linked bonds will be issued in the fiscal year 2014-2015.

After the budget, all eyes were on the interest rate and rates are expected to rise from the current low of 2.5%, held since August of last year.

In the current year, the federal government issued $80 billion of bonds and additional $5 billion inflation linked bonds of which $23 billion was used to repay maturing debt.

The current budget estimates unemployment rate of 6.25%, economic growth of 2.5% and budget deficit of $29.8 billion in the period 2014-2015.

Australian dollar closed higher at 94.01 U.S. cents and stock market trading turnover declined to 624 million shares worth $4.16 billion.

U.S. Stocks in Review

Deere & Company ((DE)) declined 2.5% to $91.34 after the largest agriculture equipment maker said equipment sales are likely to drop 4% in the current 2014 compared to a previous estimate of 3% decline.

Equipment sales declined to $9.25 billion from $10.3 billion in the April quarter.

Fossil Group Inc ((FOSL)) plunged 9% to $101.38 after the retailer of watches estimated second-quarter earnings between 90 cents and 97 cents a share, lower than analysts’ projection between $1.10 and $1.15.

The retailer also estimated lower than expected sales increase between 8% and 9.5%.

IBM Corp ((IBM)) declined 1.3% to $189.73 and Chief Executive Officer Ginni Rometty is scheduled to talk with Wall Street analysts today.

Sears Holdings declined 0.5% to $43.03 after the struggling retailer is planning to sell its 51% stake in Canada.