U.S. stocks edge lower amid global selloff
U.S. stocks declined slightly on Monday, feeling the pressure of a selloff in European equity markets. The main indexes were trading lower for the third consecutive session.
The S&P 500 SPX, -0.58% fell 4 points, or 0.2% to 2,088. The Dow Jones Industrial Average DJIA, -0.42% slipped 32 points, or 0.2% to 17,816. The Nasdaq CompositeCOMP, -1.03% declined 15 points, or 0.3%, to 5,053.
Monday’s slump comes after upbeat jobs data released Friday raised concerns that an interest-rate hike this autumn is a possibility. The Federal Open Committee Meeting is scheduled for June 16-17.
Bruce McCain, chief investment strategist at Key Private Bank, noted that the market reaction to the strong jobs report suggested investors would prefer low rates rather than a strong economy.
“There is a fear of unknown, with people realizing that interest rates are not going to stay low forever. So, markets may stay range-bound and affected by good news for the rest of this year,” McCain said.
WSJ Chief Economics Correspondent Jon Hilsenrath explains that the Federal Reserve, which is expected to wait several months to raise interest rates, is focused on managing Wall Street’s expectations.
The big data this week comes in the form of Thursday’s retail sales, which if meet forecasts, could confirm solid economic growth tipped by last week’s jobs data.
See: Retail sales may give Fed comfort to move toward rate hikes
In a note to clients dated June 5, Goldman Sachs’s chief U.S. equity strategist David Kostin and his team said they expect the S&P 500 will finish this year at 2,100, not far off Monday’s level. “Dividends will be the sole source of return during the rest of this year. As the U.S. economy strengthens and revenues increase, the S&P 500 index should rise to 2,200 by year-end 2016,” he said.
Stocks to watch: Airline company stocks were hit in early trade. American Airlines Group, Inc. AAL, -5.39% was down 2.6%, while Delta Air Lines, Inc. DAL, -4.78%and Southwest Airlines LUV, -3.12% declined more than 2%.
On the mergers and acquisition watch, Monsanto Co. MON, +0.43% shares added 0.5% after Syngenta AG SYNN, -1.62% said it rejected a second takeover offer from its U.S. rival. Reuters reported last week that Syngenta was considering an offer from German chemicals group BASF SE BAS, -1.77%
Wal-Mart Stores Inc. WMT, -0.37% was barely changed after it was upgraded to strong buy from outperform at Raymond James on Monday.
Apple Inc. AAPL, -1.07% will hold its annual developer conference on Monday in San Francisco, where it is expected to introduce a new music-streaming service. The event starts at 10 a.m. Pacific Time.
Other markets: The European Stoxx 600 index SXXP, -0.93% fell 0.8%, while the German DAX 30 index DAX, -1.18% slipped into correction territory—a 10% drop from April’s peak—on Monday. Greek worries continued to pester the market. Greek Prime Minister Alexis Tsipras was defiant in a speech to parliament on Friday, declaring creditors’ debt proposal for the country as “absurd.”
The dollar DXY, -1.00% edged lower on Monday after President Barack Obama reportedly said at the G-7 summit in Germany that the “strong dollar posed a problem.” A senior White House official denied the report to Reuters, saying the president was merely reiterating his belief that global demand needs to get stronger and other G-7 members need to increase their use of policy as a growth driver.
Oil prices CLN5, -1.93% were weak after China reported a drop in oil imports, while gold prices GCN5, +0.45% edged higher.
Stocks in Japan NIK, -0.02% fell on rising expectations for a U.S. interest-rate hike, while the Shanghai Composite Index SHCOMP, +2.17% hit its highest level in more than seven years. Data showed China’s exports fell moderately in May, whileimports tumbled due to weak domestic and international demand.
[“source-marketwatch.com”]