US indices with losses: weak economic data put a brake on buying mood

US indices with losses
Poor economic data put a brake on buying mood

Falling retail sales and increased producer prices are causing a hangover on Wall Street. The result: investors hold back with their investments. On the other hand, things are going against the trend for Boeing. The aircraft manufacturer’s papers are increasing slightly.

The majority of economic data that fell short of expectations caused Wall Street to fall. Above all, the surprisingly significant drop in retail sales weighed on the mood. Investors held back because of the Fed meeting, the results of which will be announced on Wednesday.

Inflation has increased noticeably in the past few months. The reasons were the economic recovery from the pandemic-induced slump and delivery bottlenecks. However, the US Federal Reserve insists that inflation will only be temporary – an opinion shared by many market participants. However, if inflation stays at a high level for longer and the Fed cuts its support for the markets through monetary policy tightening, this confidence could be shaken, it said.

S&P 500 4,245.30

The Dow Jones-Index lost 0.3 percent to 34,299 points. The S&P 500 closed 0.2 percent lower at 4,247 points. For the Nasdaq Composite it went down by 0.7 percent to 14,073 points – but this had also increased significantly recently.

Producer prices are rising faster than expected

As with the consumer prices published last week, producer prices rose more sharply than expected in May. The Empire State Index fell unexpectedly significantly in June compared to the previous month. Industrial production rose again somewhat more strongly than expected in May. However, the main focus was on retail sales.

Their decline in May sparked doubts about private consumption, which is so important to the US economy, but could also be understood as a sign that Americans are not worried about rising consumer prices, said Sebastien Galy, macro strategist at Nordea Asset Management. The decline in sales could mean US households are not forced to move forward for fear of inflation.

Oil prices continue to rise

Boeing
Boeing 246.54

It went against the trend for them BoeingShare up 0.6 percent. During the first visit of US President Joe Biden to Brussels, the USA and the EU defused their long-standing dispute over the aircraft manufacturers Airbus and Boeing. Both sides committed on Tuesday to waive punitive tariffs for five years in the ongoing dispute over subsidies.

With the further rise in oil prices, stocks from the energy sector were particularly sought after. With a plus of 2.1 percent, this was at the top of the sub-indices in the S&P 500. For the papers of Chevron it went up by 2.1 percent, Exxon Mobil gained 3.7 percent. The shares of the mining company Freeport-McMoran collapsed 4.7 percent. It was said that the drastic drop in the copper price of over four percent had a negative impact here.

Dollar hardly changed

Above all, the hope of a renewed increase in demand with the global easing drove the Oil prices continues – to the highest level since October 2018. “The indirect negotiations between Iran and the USA are not bearing any fruit so far, and observers also do not believe in a quick agreement,” said Ricardo Evangelista of the brokerage firm Activtrades on the planned revival of the nuclear deal. An agreement could lead to a swift lifting of the oil export restrictions.

Gold price
Gold price 1,859.90

That was evident in the foreign exchange market dollar barely changed. The fact that the greenback has recently appreciated after surprisingly high inflation data suggests that investors are speculating that the Fed will take action early on in view of increasing inflation risks, according to Commerzbank. At the same time, however, the last two labor market reports were disappointing. This environment is what makes the current Fed meeting so exciting.

The Returns showed little change after the strong previous day’s profits. The yield on ten-year US bonds was 1.50 percent. The Gold price gave in again. The focus was primarily on the meeting of the US Federal Reserve, it said. But the recent sharp rise in US yields continued to weigh on, making the interest-free precious metal less attractive.

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