Negative sentiment has also been generated by a report from the Labor Department showing that USA consumer prices rose by slightly more than expected in August.
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Equities continued to whipsaw investors after Friday’s rout jolted markets from a two-month torpor and wiped nearly $2 trillion in value from stocks amid concern that central banks would deliver smaller doses of stimulus even as the global economy sputters along. Into the USA open, investors braced for the possibility that bullish retail sales and wholesale price data could convince the Fed to tighten next week.
The Federal Open Market Committee and the Bank of Japan are both scheduled to wrap up their policy meetings on Wednesday.
“Markets are being driven more by sentiment than logic right now”, said Peter Andersen, chief investment officer at Fiduciary Trust in Boston, which has more than $11 billion of assets under supervision.
Meanwhile, the major European markets moved to the downside on the day.
In 3.09pm trading in NY, the Dow Jones Industrial Average slipped 0.2 percent. The gauge has slipped 2 percent since August 15, dragged down by losses of at least 3.7 percent for health-care and consumer stocks.
Helping limit losses was Intel’s 3.04 percent gain to a 15-year high after the chipmaker raised its third-quarter revenue forecast. The Nasdaq composite was up 18.5 points, about 0.4 percent, to 5,173.8.
Half of the 10 major S&P 500 indexes were higher, led by a 0.48 percent rise in the technology sector.
Excluding food and energy prices, core consumer prices climbed by 0.3 percent in August after edging up by 0.1 percent in July. Lenders rebounded after their worst three-day drop in two months, with those in Italy, Spain and Portugal among the biggest gainers.
Benchmark 10-year notes were up 4/32 in price to yield 1.6891%, down from 1.703% on Thursday but slightly higher than the 1.67% before the inflation figures.
The Fed will meet on the same dates as the BOJ, which will unveil the results of a comprehensive review of its stimulus programme after failing to reach its 2 percent inflation target.
Vitae Pharmaceuticals (VTAE.O) shares more than doubled to $20.86 after Allergan (AGN.N) said it would buy the company for $639 million. Most of the volatility has come as investors prepare for next week’s Fed meeting.
The data led to renewed concerns about the outlook for interest rates, although analysts largely said the report will not be enough to push the Federal Reserve to raise rates next week.
Yields rose across the euro area as Spain and France sold bonds.
But in Tokyo the Nikkei index rose 0.7 per cent. While the German DAX Index slumped by 1.5%, the French CAC 40 Index slid by 0.9% and the UK’s FTSE 100 Index fell by 0.3%.
The Bloomberg Dollar Spot index, a gauge of the greenback against 10 major peers, slipped 0.1 percent for a second day of declines after the retail sales report damped speculation that the Fed will raise interest rates anytime soon.
“The markets have become dominated by central banks, not just here in the US but globally, that’s the dominating force across all asset classes”, said Bret Chesney, senior portfolio manager at Austin, Texas-based Alpine Partners.
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The SNB warned that significant risks remain after sticking with its ultra-loose monetary policy and currency intervention, while the BOE said it is still likely to cut interest rates to just above zero this year. Support for a rally today is likely to be generated by a strong performance in USA technology stocks and a rebound rally in crude oil.
