US ‘in holding pattern’: Morning market insights

The New York Stock Exchange fell overnight as industrial and consumer discretionary stocks led declines, despite better-than-expected bank earnings.

The number of Americans applying for unemployment benefits was greater than expected: 386,000 claims were filed last week. A survey of manufacturers on the east coast found business conditions had declined more than expected. Sales of existing US dwellings fell for the second-straight month, dropping 2.6% in March.

“The market is in a data-driven holding pattern,” Philip Orlando, the New York-based chief equity strategist at Federated Investors, told Bloomberg. “You’ve got a lot of counter-balancing points. We got some soft economic data, while earnings are beating expectations. Investors are looking at each incremental data point trying to draw conclusions.”

The S&P500 Index declined 0.59% to 1376.92 overnight.

The Dow Jones Industrial Average was down 0.53%, or 68.65 points, to 12964.10.

The NASDAQ Index fell 0.79% to 3007.56.

“We’re getting some reminders that the US economy is not in spectacular shape,” Matt King, chief investment officer at Bell Investment Advisors, told CNN Money. “It’s growing, but at a very slow rate. With every two steps forward, it’s taking one back.”

West Texas Intermediate (WTI) oil fell 0.39% to $US102.27 a barrel overnight.

Gold was up 0.11% to be trading at $US1641.40 an ounce.

The Australian dollar was lower overnight, buying $US1.0335 at 8.15am AEST.

Europe

European share markets fell overnight after the Spanish government sold all its bonds but yields rose. The city of London was flat, bucking the trend.

Spain sold 2.54 billion euros ($AU3.23 billion) of two-year and 10-year debt overnight. The yield on its 10-year note climbed to 5.92%, keeping concerns alive about the country’s ability to manage its debt. Italian bond yields also rose, underscoring the continuing problems with southern Europe’s debt and economic situation.

“They’re trying to manage expectations,” Brian Barry, a fixed income analyst in London, told CNN Money. “It’s not necessarily a ringing endorsement of Spanish bonds.”

The London FTSE 100 was flat, closing down 0.01% to 5744.55.

The German DAX was down 0.90% to 6671.22.

The European Stoxx50 index fell 1.85% to 2284.67.

International Monetary Fund managing director Christine Lagarde received pledges of about $320 billion in her campaign for bigger reserves to build a big enough of a firewall to prevent Spain and Italy frmo impacting on world growth.

“I look at this pot of money as an umbrella,” Lagarde told Bloomberg Television. “There are clouds on the horizon.”

Japan, Denmark and Switzerland are among the countries to answer Lagarde’s call for funds. South Korean Finance Minister Bahk Jae Wan promised his country would contribute “more than its fair share”.

The US has refused to contribute more money.  Simon Johnson, a former IMF chief economist who now teaches at the Massachusetts Institute of Technology, said the Europeans needed to fix their own problems.

“Bailing them out, protecting them with generous money from outside, will not help them make progress,” Johnson told Bloomberg Television.

Australian Treasurer Wayne Swan and Canadian Finance Minister Jim Flaherty also urged Europe to do more.

“Important reforms are still needed to minimise the risk of contagion from instability in Europe,” Swan said.