US stocks extend losses on downbeat GDP data

30 May 2015 | Author: | No comments yet »

What you need to know before markets open.

NEW YORK (Reuters) – Global equity markets and bond yields both fell on Friday, as data showed the U.S. economy contracted in the first quarter and as investors were unnerved by mixed signals from Greece’s debt talks.U.S. stock index futures are lower today amid some dismal GDP data out of Canada and the United States and worries about Greece’s ability to strike a deal with its eurozone partners by Sunday.Equities on both sides of the Atlantic moved down as investors tried to gauge the timing of a US Federal Reserve interest rate increase, and the potential for a deal between Greece and its international creditors to stave off financial collapse. Canada’s economy shrank between January and March, the first contraction in four years and the largest since the 2009 recession as collapsing energy prices prompted a plunge in business investment.

In late trading in New York, the Dow Jones Industrial Average slid 0.38%, the Standard & Poor’s 500 Index fell 0.35%, while the Nasdaq Composite Index declined 0.32%. A report showed the number of Americans filing new claims for unemployment benefits unexpectedly rose by 7000 to 282,000 last week, from an upwardly revised 275,000 the prior week.

Treasury yield falling to its lowest level in three and a half weeks, at 2.84 percent, while benchmark U.S. 10-year yields hit a three-and-a-half-week low at 2.097 percent. A eurozone official said Greece will not be able to get the money still available under its current bailout plan if it does not agree to the outline of a such a deal by the end of the week. Bank of Nova Scotia, Canada’s third-largest lender by assets, beat analysts’ estimates after reporting fiscal second-quarter profit was little changed. The claims and home sales reports are encouraging for second-quarter growth.” “We still think September is the best time for a rate hike but the pace is going to be slow and methodical,” Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis, told Reuters. “I see the dollar trade probably continuing at this point since we’re the only ones moving toward a tightening bias,” Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont, told Reuters. “Greece is the wild card in terms of what will happen to the euro.” Indeed all eurozone eyes are on Greece and the negotiations with its lenders before another payment is due next week. Consumer sentiment fell this month, a survey by the University of Michigan showed, while the Institute for Supply Management-Chicago Business Barometer unexpectedly fell in May.

Markets will be quite volatile as everyone tries to read the signals.” In Europe, the Stoxx 600 Index finished the session with a 0.5% drop from the previous close. ET Altera rose 6.2 per cent to $49.90 in premarket trading after the New York Post reported that Intel was close to buying the chipmaker for about $15 billion. Both stocks had gained on Wednesday amid rumours of a pending deal. “The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors,” Hock Tan, Avago chief executive, said in a statement.

Data from the Energy Information Administration on Thursday showed crude oil inventories fell more than expected, declining by 2.8 million barrels in the last week. The dollar index was down 0.06 percent at 96.902 and remained on track for a rise in May, resuming a string of nearly uninterrupted monthly gains that began last July.

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