Stocks slip ahead of crucial meetings
NEW YORK, USA - STOCKS ended slightly lower yesterday as investors held back ahead of three critical events this week: policy meetings at both the Federal Reserve and the European Central Bank and a closely watched report on jobs in the US.
The Dow Jones industrial average lost 64.33 points to close at 13,008.68. The Standard & Poor's 500 edged down 5.98 points to 1,379.32, and the NASDAQ composite lost 6.32 points to 2,939.52.
The Federal Reserve, which started a two-day policy meeting yesterday, had appeared to be moving toward announcing some kind of new step to energise the U.S. economy. But there were big questions over whether it will do so this week.
That's because some economists believe the Fed isn't convinced that the US economic slowdown is pronounced enough yet to require more economic stimulus. A slew of recent data that has shown weakness in the economy has been offset by some pockets of strength.
Yesterday was no exception.
The Commerce Department reported that spending by the US consumer was unchanged in June. But personal income edged up 0.5 per cent.
"If incomes are rising, but people aren't spending, it tells you that the consumer has some ammunition for more spending during the crucial back-to-school season," said Quincy Krosby, market strategist with Prudential Financial.
There were other positive numbers. The Standard & Poor's/Case-Shiller home price index released yesterday showed that prices increases in all of the 20 cities it tracks. The Conference Board said Consumer Confidence Index increased to its highest reading since April, and better than economists had forecast.
Investors were also closely watching for the outcome from the European Central Bank's (ECB) meeting tomorrow to discuss concrete steps to help countries with crippling debt.
It will be the first meeting after ECB President Mario Draghi said last Thursday that the central bank would do "whatever it takes" to preserve the euro, sending markets sharply higher. Over the following days, the leaders of Germany, France and Italy also said they would do all they can to protect the 17-country currency union. The comments raised expectations that the ECB might step in to buy Spanish and perhaps Italian government bonds to lower the borrowing costs for those countries, which have shot up to unsustainably high levels.
Investors were also waiting for the monthly unemployment report on Friday, the most-watched gauge of the health the US economy.
"There's a lot to absorb this week, including two major announcements from two very important central banks and payroll data," Krosby said.
Corporate earnings news did little to inspire investors.