- Markets digest a deluge of data
- Tensions in Egypt continue to escalate
- Wal-Mart disappoints with outlook
Dow Jones: -1.41%
S&P 500: -1.39%
Mixed economic data, disappointing results from Wal-Mart and rising tensions in Egypt combined to send US stocks lower on Thursday morning in New York with benchmarks dropping well over one per cent each as risk appetite takes a hit.
The ongoing violence in Egypt continues to be a worry for markets after the interim government declared a state of emergency yesterday and Vice-President Mohamed ElBaradei resigned after a wave of bloody protests over recent days. Oil prices were higher today on fears that the unrest could disrupt supplies in the Middle East.
A wave of car-bomb attacks in Baghdad has also provided a drag on investment sentiment after leaving dozens dead across the Iraqi capital.
Back in the States, economic data was in focus today. Manufacturing surveys from New York and Philadelphia disappointed today, while industrial production was flat, muddying the outlook for the world's largest economy.
However, data from the labour market - which seems to be a decided factor in the Federal Reserve's potential scaling back of stimulus - came in better than anticipated with jobless claims falling to their lowest levels since October 2007. In addition to a rise in consumer prices, speculation about an imminent tapering of asset purchases at the central bank's next meeting in September continues to ramp up.
Economic data comes in mixed
Consumer prices rose at a 0.2% month-on-month pace in July, as expected, with the annual rate rising to in line with the Fed's target of 2.0%. Core consumer prices (which exclude food and energy prices) also increased 0.2% from June and were up 1.7% from July 2012.
Initial jobless claims fell to 320,000 in the week ended August 9th, down from an upwardly revised 335,000 the week before (consensus forecast: 335,000).
The Empire State manufacturing index unexpectedly fell to 8.24 in July from 9.46 previously (forecast: 10). Meanwhile, the Philly Fed manufacturing index dropped sharply from 19.8 to 9.3 (forecast: 15).
Industrial production was flat in July, down from June's 0.2% rise (forecast: 0.3%).
Wal-Mart disappoints; Cisco to cut 4,000 jobs
Results from the world's largest retailer, Wal-Mart, sparked a fall in the share price today after the company reduced its full-year profit guidance and disappointed with worse-than-expected sales in the second quarter.
The earnings target range for this year was cut by 10 cents to between $5.10-5.30 a share on 2-3% sales growth, down from its prior 5-6% growth forecast.
Network-equipment group Cisco Systems was also in focus today after announcing that it would slash its workforce by 5.0%, getting rid of 4,000 jobs. The news came as the company posted net income of $2.3bn in the fourth quarter, up from $1.9bn the year before.