June 3rd 2014 – Dow, S&P 500 log first drop in 4 days
Market View:
A favourable report from China overnight didn’t seem to cause any more upside. Also, the reports that came out in the US were also good. The issue is that the market is a little overstretched and requires a small retracement before it can move up.
Tomorrow we have possibly big news from Europe from the ECB chairman Mario Draghi. Monetary policy is on the table and a plan to add stimulus to the European economy may be about to be announced.
Market News:
Stocks eased off their lows but still closed in the red in lackluster trading Tuesday a day after the Dow and S&P 500 hit fresh highs.
Stocks initially pared their losses after a better-than-expected factory orders report. New orders for factory goods climbed 0.7 percent in April, rising for a third-straight month and topping expectations for 0.5 percent.
Investors will be looking ahead to the monthly nonfarm payrolls report on Friday. Economists expect to see 218,000 jobs added in May and a 6.4 percent unemployment rate, according to a Reuters poll.
Overnight, an HSBC survey showed that China’s factory sector put in its best performance in four months in May as export orders rebounded, although activity remained in contraction territory.
European and Asian shares failed to rise on the news, which was already priced in following Monday’s positive official manufacturing data from China.
Traders in Europe remain cautious ahead of Thursday’s European Central Bank Governing Council meeting. Many economists expect President Mario Draghi to announce policy measures to combat low inflation, such as interest rate cuts, cheap loans to banks or even Federal Reserve-style asset purchases.
In addition, President Barack Obama will begin his European trip with meetings in Poland to discuss security issues regarding Russia. Obama is also expected to meet with Ukrainian President-elect Petro Poroshenko.
WEDNESDAY: Mortgage applications, ADP employment report, international trade, productivity & costs, ISM non-mfg index, oil inventories, Beige Book, G7 meeting
News Sources: CNBC and CNN Money