Shares were down slightly yesterday as investors sorted through another round of economic data and retail earnings. Retailers’ earnings came in above expectations and the US Labour Department said inflation remained in check during October. Overseas markets retreated slightly after big gains the previous day.
Investors are examining earnings from retailers, looking for signs of strength in consumers. A report showing a rebound in retail sales helped push major indexes higher on Monday.
Consumer spending accounts for about 70 per cent of all economic activity in the US, and a rebound in spending — especially during the upcoming holiday season — is necessary for a strong economic recovery.
However, the US Federal Reserve chairman, Ben S. Bernanke, reiterated that an economic recovery is likely to be only moderate. He also said the pace of the recovery will keep unemployment from declining quickly. Consumers’ anxiety about their job security has been the primary factor behind their modest spending.
Traders received a disappointing report on industrial production. The Fed said production at the nation’s factories, mines and utilities rose 0.1 per cent, less than the 0.4 pe rcent predicted by economists polled by Thomson Reuters.
In early trading, the three major Wall Street exchanges were all flat, but slightly lower.
The dollar mostly rose against other major currencies yesterday, while the price of gold declined after setting a record high a day earlier.
European and Asian stock markets fell modestly, a day after a stronger than anticipated rebound in American retail sales helped many of the world’s major indexes rise to their highest levels this year.
The FTSE 100 in London was down 0.6 per cent; after it closed the day before at its highest since September 2008.
Meanwhile, the DAX in Frankfurt fell 0.4 per cent while the CAC-40 in Paris dropped 0.5 per cent. Both indexes are near yearly highs as well.
Earlier in Asia, Japan’s Nikkei 225 stock average lost 61.25 points, or 0.6 per cent, to 9,729.93 with exporters hit by the appreciating yen. Hong Kong’s Hang Seng fell 29.83, or 0.1 per cent, to 22,914.15.