Stocks Decline as Data Bolster Concern on Stimulus (Bloomberg)
Stocks fell today, undermining the seventh monthly gain for the Standard & Poor’s 500 Index, as better-than-forecast data on business activity and consumer confidence added concern that the Federal Reserve might scale back its stimulus. Investors are even predicting that there will be a slowdown for stocks this summer. “May will be the seventh month in a row where the S&P 500 has traded higher, and the markets are maybe looking for a reason to pause or consolidate,” Jim Russell, a senior equity strategist in Cincinnati at U.S. Bank Wealth Management, said. “We wouldn’t be surprised to see the market trade sideways to down in the weeks ahead on, call it, slow summer months, questions around Fed tightening and perhaps sluggish earnings growth in the second quarter.”
Dollar rallied by strong economic data (Reuters)
The dollar strengthened across the board today, marking an eighth straight month of gains against the yen, as upbeat economic data reinforced the view that the Federal Reserve could begin to taper its stimulus sooner than expected. The stronger-than-expected data has offset an earlier report prognosticating subdued inflation and a drop in consumer spending. “The dollar is well-bid today because of the U.S. data, which corroborates expectations that the Fed may have to taper its quantitative easing program soon,” said Greg Moore, currency strategist at TD Securities in New York.
Consumer Sentiment Jumps to Six-Year High (CNBC)
According to a recent survey released today, consumer sentiment has surged to its highest level in nearly six years due to greater optimism over the economic outlook and personal finances in the midst of record stock prices. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment rose from April’s 76.4 to 84.5 — the highest level since July 2007. “The data clearly suggest a faster pace of growth in consumer spending during the year ahead than was anticipated even one month ago,” survey director Richard Curtin said.
