Stocks mini rally falters as central bank angst returns
A mini stocks rally triggered by positive US economic data faltered on Thursday, while the yen held onto gains against the dollar after surging earlier in the week.
Wall Street indices were stuck in the red the entire day, with more positive economic data prompting concerns among investors about rate hikes by the US Federal Reserve.
The Dow finished 1.1 percent lower, while the tech-heavy Nasdaq Composite fell 2.2 percent.
"The momentum of the rally the stock market enjoyed yesterday has not carried over this morning," said Patrick O'Hare at Briefing.com.
"Better than expected third quarter GDP and weekly initial claims data... has fueled concerns about Fed tightening" interest rates further and for longer, he added.
Revised Commerce Department figures now show the US economy expanded at a 3.2 percent annualized rate in July through September, markedly higher than the 2.6 percent first estimated in October.
Meanwhile, jobless claims did not rise as much as economists expected.
Both figures indicate that the US economy is still chugging along handsomely, while the Fed has signaled it will raise interest rates until it achieves a sufficient slowdown in activity to tame rampant inflation.
The drop in Wall Street equities "likely reflects the growing feeling of concern that the Federal Reserve will continue pushing rates upwards in the absence of any major economic distress signal," said Joshua Mahony, senior market analyst at online trading platform IG.
"The bears are back in charge today," he added.
Tech stocks took a beating after US computer storage memory manufacturer Micron posted softer-than-expected earnings, with its shares slumping 3.4 percent.
"Micron's earnings did not provide any optimism for the chip sector as they struggle with an inventory glut that will make it difficult for them to be profitable," said market analyst Edward Moya at trading platform OANDA.
Equities have been volatile in recent weeks as investors weigh up interest rate hikes and global recession risks against the reopening of China's economy.
Thursday's reaction of investors to good economic news was the opposite the day before, when a bigger-than-expected jump in US consumer confidence this month sent stocks soaring.
Asian stocks took their cue from Wednesday's gains in New York, led by Hong Kong which rose by more than two percent. Tech firms tracked their US counterparts higher and property stocks were boosted by comments from top Chinese officials pledging support for the beleaguered sector.
Towards the end of the day, Shanghai dipped on worries about rising Covid cases in China.
But hopes for a Santa rally -- a period of rising share prices around the year-end holidays -- were crushed as the momentum failed to carry over into European trading.
London ended the day down 0.4 percent, while Paris shed 1.0 percent and Frankfurt fell 1.3 percent.
"Bye-Bye Santa rally, Grinch selloff is here to stay," said OANDA's Moya.
- Key figures around 2140 GMT -
New York - DOWN 1.1 percent at 33,027.49 (close)
New York - S&P 500: DOWN 1.5 percent at 3,822.39 (close)
New York - Nasdaq: DOWN 2.2 percent at 10,476.12 (close)
London - FTSE 100: DOWN 0.4 percent at 7,469.28 (close)
Frankfurt - DAX: DOWN 1.3 percent at 13,914.07 (close)
Paris - CAC 40: DOWN 1.0 percent at 6,517.97 (close)
EURO STOXX 50: DOWN 1.3 percent at 3,823.29 (close)
Tokyo - Nikkei 225: UP 0.5 percent at 26,507.87 (close)
Hong Kong - Hang Seng Index: UP 2.7 percent at 19,679.22 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,054.43 (close)
Dollar/yen: DOWN at 132.36 yen from 132.46 yen on Wednesday
Euro/dollar: DOWN at $1.0598 from $1.0605
Pound/dollar: DOWN at $1.2036 from $1.2082
Euro/pound: UP at 88.02 pence from 87.76 pence
Brent North Sea crude: DOWN 0.8 percent at $80.98 per barrel
West Texas Intermediate: DOWN 1.0 percent at $77.49 per barrel
burs-jmb/bys
H.Davies--TNT
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