- Spending, confidence data fails to meet forecasts
- France backs US on Syria intervention
- Krispy Kreme disappoints
Dow Jones: -0.20%
S&P 500: -0.16%
US markets slipped into the red in morning trade on Friday after consumer spending and confidence data failed to meet forecasts, with caution setting in ahead of the long three-day weekend.
The outcome of the debate over whether to launch a military strike in Syria still remains a concern for markets after UK Prime Minister David Cameron lost an initial vote to intervene - oppositions decided to wait for firm evidence from UN inspectors on the alleged use of chemical weapons by the Bashar al-Assad regime.
Meanwhile, French President Francois Hollande signalled that he could be the main ally to the US in taking action against the Syrian government, saying that the UK vote made no difference to France's position.
"In addition to traders abstaining from buying risk-on assets today, ahead of a decision regarding Syria, investors in the US will also be looking forward to a long-weekend owing to the Labour Day holiday on Monday," said Financial Trader Shavaz Dhalla from Spreadex.
"Although volumes will probably get thinner over the course of today, investors should still remain cautious for any signs of a sell-off. It is entirely possible that certain investors will contemplate trimming some risk from their portfolios ahead of what is likely to be a headline-driven market next week."
Economic data comes up short
Consumer spending edged just 0.1% higher in July, down from a revised 0.6% gain the month before and below the 0.3% increase expected by analysts. Personal incomes only improved by 0.1% as well last month, slowing from the 0.3% rise in June and the 0.2% forecast.
The core personal consumption expenditure price index meanwhile - the Federal Reserve's measure of inflation - rose by 0.1% in July, down from 0.2% in June and below the 0.2% increase expected.
Paul Dales, Senior US Economist at Capital Economics, said that the July data suggests that real consumption in the third quarter may struggle to match the 1.8% growth seen in the second, especially given the recent rise in oil prices.
"What's more, the recent rise in oil prices
may restrain real growth as households will pay more to buy the same amount of gasoline. At the moment, incomes aren't rising fast enough to support faster consumption growth," he said.
The closely-watched University of Michigan/Thomason Reuters consumer confidence index fell to a four-month low of 82.1 in August, pulling back from a six-year high of 85.1 the month before. Nevertheless this was still higher than the preliminary August figure of 80 and ahead of the 80.5 consensus forecast.
The Chicago purchasing mangers' index (PMI) rose from 52.3 to 53.0 in August, as expected.
Krispy Kreme fails to meet forecasts
Krispy Kreme Doughnuts tumbled after its second-quarter adjusted earnings came in at 14 cents a share, missing the 16 cents estimate by analysts. Revenue grew by 10% to $112.7m but also missed forecasts.
Salesforce.com Inc. surged after the company issued third-quarter sales and earnings forecasts that beat analysts' estimates.
Exxon Mobil Corp. tumbled as the price of oil declined after a delay of a possible imminent strike in Syria was delayed.