Indices hit by a dour forecast by the world's biggest retailer Wal Mart
Stocks at Wall Street slumped badly on Wednesday, 14 October 2015 hit by a dour forecast by the world's biggest retailer and as a key report from the Federal Reserve offered a muted picture of growth in the U.S. The Fed's so-called Beige Book, released in the afternoon, pointed to stalled growth in the economy while a tumble in Wal-Mart stocks unsettled investors.
The Dow Jones Industrial Average fell 157 points, or about 1%, lower to 16,924. The Nasdaq Composite Index was 13 points, or 0.3%, lower at 4,782. The S&P 500 index shed 9 points, or 0.5%, to 1,994.24, with consumer staples and consumer discretionary stocks weighing on the broad stock-market benchmark.
Equities displayed modest gains in the early going, but relative weakness in several influential sectors prevented the S&P 500 from holding its early gain. The index made another brief appearance above its flat line during the early afternoon, but slid to lows before the closing bell. Combined with disappointing economic reports earlier in the day, Wal-Mart's forecast and the Fed's Beige Book survey amplified deep concerns about the outlook for a U.S. economy that has looked shaky since Oct. 2 employment report disappointed.
Eight sectors registered losses. The financial sector settled among the laggards after showing relative weakness throughout the day. Three major components reported earnings with Bank of America adding 0.8% in reaction to a bottom-line beat on in-line revenue while JPMorgan Chase and Wells Fargo surrendered 2.5% and 0.7%, respectively.
Wal-Mart Stores shares sank more than 10%, shaving 44 points from the Dow industrials after the company cut its growth outlook and launched a plan to repurchase $20 billion of its shares over a two-year period as the retailer embarks on a three-year plan to boost growth.
Weaker-than-expected economic reports helped push yields on benchmark 10-year Treasury notes their lowest level in five months.
The U.S. dollar index declined against its main rivals on Wednesday as disappointing economic data lifted expectations that the Fed would continue to delay an interest-rate hike. In September, U.S. retail sales barely rose and the producer-price index fell by a bigger-than-expected 0.5%. August business inventories were unchanged.
The key data points in the U.S. Wednesday were the retail sales report for September and the Fed's beige bookboth of which fell into the dovish U.S. monetary policy camp. Retail sales came in at up 0.1%. The overall sales figure was expected to be up 0.2% versus up 0.2% in August. Revisions to the previous months and other internals of the retail sales report were also disappointing. The Fed's beige book, released in the afternoon, showed a weakening U.S. manufacturing sector. The negative readings provide further ammunition for the monetary policy doves, who want the Federal Reserve to hold off on raising interest rates until next year, at the earliest.
World stock markets were mostly weaker on Wednesday, following some more downbeat economic news coming out of China, the world's second-largest economy and the world's leading raw commodity importer. China's consumer price index rose 1.6% in September, year-on-year, compared to a rise of 2.0% in August. This data falls into the camp of market watchers that are worried about worldwide price deflation.
There was also disappointing economic news coming out of the European Union on Wednesday. Industrial output in the Euro zone declined by 0.5% in August from July, and was up 0.9%, year-on-year. The numbers were in line with market expectations.
Those lackluster readings suggested to some that Federal Reserve policy makers will continue to face stubbornly low inflation readings, fueled by a sustained drop in commodity prices. The U.S. central bank's mandate centers on maximizing employment and keeping inflation at a 2% target level, which is considered a healthy level of price increases.
Bullion prices ended the U.S. day session higher on Wednesday, 14 October 2015 and gold scored a 3.5-month high. Gold futures climbed Wednesday to log a fourth straight session of gains, as a weaker U.S. dollar helped prices finish at their highest level in almost four months.
Gold for December delivery gained $14.40, or 1.2%, to settle at $1,179.80 an ounce on Comex. Meanwhile, December silver tacked on 21 cents, or 1.3%, to $16.117 an ounce.
Crude Oil futures settled barely lower on Wednesday, 14 October 2015 recouping nearly all of their earlier losses after a spate of disappointing U.S. economic data that dulled the prospects for energy demand. Traders also awaited weekly reports that are expected to show an increase in domestic crude supplies set for Thursday. the data will be released a day late this week because of Monday's Columbus Day holiday.
Crude prices slipped by 2 cents on Wednesday. U.S. production data will be key in the EIA report. Traders expect to see crude-oil stockpiles up by 1.8 million barrels in the week ended Oct. 9.
Tomorrow, weekly Initial Claims (consensus 269K), September CPI (consensus -0.2%), and October Empire Manufacturing survey (expected -8.0) will be released at 8:30 ET while the Philadelphia Fed Survey for October will cross the wires at 10:00 ET. Also of note, the September Treasury Budget (consensus $95.00 billion) will be released at 11:00 ET.
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