NEW YORK: A measure of world stock markets reversed early gains to trade slightly lower yesterday, weighed by a decline in US stocks, while the dollar and bond yields fell as last week’s surprisingly weak US jobs data strengthened the case for the Federal Reserve to keep interest rates low for longer.
US Treasuries prices edged up, after the benchmark 10-year note yield registered its largest one-day fall since October on Friday. The dollar dropped to its lowest level in four weeks against the yen.
Wall Street kicked off a week full of corporate earnings reports on a cautious note on growing concerns that stocks may have become expensive, with the benchmark S&P 500 at its highest level in nearly seven years. The index surged almost 30 percent in 2013.
“People are sitting on their hands, waiting for major results to figure out how strong this season may be,” said Douglas DePietro, managing director at Evercore Partners in New York.
Investors will keep an eye on fourth-quarter earnings, with major US banks, including JPMorgan, Citigroup and Goldman Sachs, announcing results this week. European earnings will gather pace in the last week of the month.
According to Thomson Reuters data, fourth-quarter profits are expected to grow 7.3 percent over the year-ago period. However, the 9.8 ratio of negative guidance to positive outlooks is currently the largest on record.
US stocks fell in early afternoon trading. The Dow Jones industrial average was down 116.53 points, or 0.71 percent, at 16,320.52. The Standard & Poor’s 500 Index was down 13.97 points, or 0.76 percent, at 1,828.40. The Nasdaq Composite Index was down 28.27 points, or 0.68 percent, at 4,146.40.
Equities in emerging markets rallied as investment funds moved back to riskier assets. In Europe, banking shares rallied after regulators agreed to soften new leverage ratios for banks. The STOXX bank index rose 1.5 percent, extending its gains this year to almost 6 percent.
MSCI’s world equity index was down 0.1 percent while emerging stocks were up 0.6 percent. The FTSEurofirst 300 index of top European shares rose 0.3 percent to 1,324.42, while the euro zone’s blue-chip Euro STOXX 50 index was up 0.3 percent at 3,111.94.
reuters
