- Consumer confidence falls in September
- Home prices jump in July
- Stimulus, debt ceiling in focus
Dow Jones: 0.11%
S&P 500: 0.08%
US markets opened with small gains on Tuesday morning in New York as investors digested mixed economic data and what it means for the future of monetary policy.
The Conference Board's index measuring consumer confidence fell from a revised 81.8 to 79.7 in September, a four-month low and below the 79.9 expected by analysts.
"We suspect that if the rebound in equity prices is sustained, along with the drop back in gasoline prices, confidence will rebound," said analyst Amna Asaf from Capital Economics.
Other economic data released today showed that US house prices increased at an annual rate of 12.4% in July, up from the 12.1% rise in June, according to the S&P/Case-Shiller home price index. This was the biggest annual jump since February 2006 and was more or less in line with forecast.
Meanwhile, the regional manufacturing index for Richmond dropped from 14 to 0 in September (forecast: 12).
Last week's surprise decision by the Federal Reserve to maintain its stimulus programme is still fresh in investors' minds given that the central bank said the recovery was not strong enough to warrant a 'taper'. New York Fed President William Dudley on Monday defended the move, saying the US economy had not picked up enough forward momentum, while James Bullard (St Louis Fed) said last week that a taper could still come in October.
Market Strategist Ishaq Siddiqi from ETX Capital said that the market is "again having to re-adjust its expectations for the timing of tapering" after figures showed a drop-off in housing and consumer activity - "both being engines of growth for the US".
"Fed members haven't been helpful, sending out contradictory messages; this all has left investors feeling as confused as ever over when we are likely to see the first round of liquidity reduction by the Fed," he said.
Markets will now turn to speeches from Fed Bank of Cleveland President Sandra Pianalto and Fed Bank of Kansas President Esther George today.
Debt ceiling talks are also high on the agenda after President Barack Obama urged Congress to approve a budget to prevent a government shutdown by October 1st. If the government fails to reach an agreement to raise the borrowing authority, which is currently limited to $16.7tn, it could lead to the first default by the US on its debt obligations.
Facebook jumps after broker upgrade
Facebook advanced after Citigroup raised its rating from 'neutral' to 'buy' and hiked its target price from $32 to $55.
The bank had previously been concerned that the rapid shift from desktop to mobile could create "monetisation challenges". However, after speaking to advertisers and agencies, it said: "We believe the factors driving the sudden inflection and growth in 2Q13 are sustainable and that there are a number of factors that should contribute to further growth and gains, and potential upside".
Semiconductor equipment maker Applied Materials rose strongly after saying it had agreed to buy Japanese peer Tokyo Electron for about $9.3bn in shares, merging the two companies into an entity worth around $29bn.
Boeing gained after EADS' latest Global Market Forecast report said that current global aeroplane fleet could double to 36,560 aircraft by 2032. Investors were shrugging off the news that South Korea has reopened an $8bn tender to upgrade its ageing air force; Boeing's S-15SE model had been seen as the firm favourite.
Software group Red Hat was a heavy faller today after disappointing second-quarter results following the bell last night. The company's earnings and revenue figures beat analysts' forecasts but billings growth came in well below expectations.