U.S. Stocks Fall on Economic Data as Treasuries Advance

May 15, 2014

New York (May 15)  U.S. stocks fell for a second day as industrial production unexpectedly dropped and Wal-Mart Stores Inc. forecast profit below estimates. The euro weakened to the lowest level in more than two months against the dollar on speculation policy makers will pursue more stimulus.

The Standard & Poor’s 500 Index slipped 0.3 percent as of 9:33 a.m. in New York. The Stoxx Europe 600 Index slipped 0.3 percent. The yield on 10-year Treasuries dropped two basis points to 2.52 percent, while the rate on 10-year Italian bonds rose seven basis points to 2.99 percent. Europe’s shared currency declined 0.3 percent to $1.3673. Oil fell 0.5 percent and nickel slid 6.4 percent.

Industrial production in the U.S. unexpectedly declined in April while U.S. jobless claims fell to the lowest level in seven years last week. Federal Reserve Chair Janet Yellen will speak after saying last week the U.S. economy still needs support. Euro-area policy makers are prepared to add more monetary stimulus if needed, European Central Bank Vice President Vitor Constancio said in Berlin.

“There’s not really any great news here,” Randy Bateman, who oversees $3.5 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by phone. “It’s just a slower growing period. Unless we see something that will really drive investor enthusiasm, it’ll be a trading-range market.”

The S&P 500 dropped 0.5 percent and the Russell 2000 Index slid 1.6 percent yesterday amid a selloff in small-cap and technology shares. The S&P 500 has advanced 4 percent from a low on April 11, climbing this week to an all-time high of 1,897.45. The Russell index is down 8.7 percent from a March high.

Industrial Production

Wal-Mart fell 2.5 percent today. About 76 percent of those that have reported results this season have beaten analysts’ estimates for profits, while 53 percent topped sales projections, data compiled by Bloomberg show.

Output at factories, mines and utilities decreased 0.6 percent after a 0.9 percent gain the prior month that was larger than previously reported, a report from the Federal Reserve showed today in Washington. The median forecast in a Bloomberg survey of 81 economists called for an unchanged reading. Manufacturing, which makes up 75 percent of total production, decreased 0.4 percent.

The report contrasted with a higher-than-forecast reading on the Federal Reserve Bank of New York’s gauge of regional manufacturing, which climbed to 19.01 this month, from 1.29 in April.

Jobless Claims

Labor Department data showed the fewest Americans in seven years filed applications for unemployment benefits last week, while a separate report indicated the cost of living in the U.S. rose in April by the most in almost a year.

Yellen will address the U.S. Chamber of Commerce today after the market close. She said last week that the world’s biggest economy still requires a strong dose of stimulus. While data show “solid growth” in the second quarter, “many Americans who want a job are still unemployed” and inflation remains low, she said.

Three rounds of monetary stimulus have helped fuel economic growth, sending the S&P 500 surging as much as 180 percent from its 2009 low.

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