The stock markets in the United States ended the trading session on the red today. A Federal Reserve official suggested that the interest rate may increase by March next year and data showed that consumer spending grow less than expected.
The Department of Commerce reported that consumer spending rose 0.2% last month as Americans purchase new cars and trucks. The agency also reported that personal income climbed 0.4%. Economists polled by Bloomberg expected a 0.4% growth in consumer spending in May.
Separately, James Bullard, the president of the Federal Bank of St. Louis projected that the central bank may increase the interest rate during the first quarter next year given the improvement of the labor market and inflation. According to Bullard, the unemployment rate may decline below 6%, and the inflation will rise close to 2% by the end of the year.
Commenting on the movement of the stock markets today, Joe Bell, senior equity analyst at Schaeffer’s Investment Research told Bloomberg, “There’s a multitude of factors driving the market lower. You’re seeing the Fed comments from Bullard come out, a market that’s been on a low-volatility uptrend and uncertainty from a geopolitical standpoint over in Iraq. It’s a perfect storm for different parties to take some money off the table.”
On the other hand, Thomas Tucci, managing director and head of Treasury trading at CIBC World Markets Corp. opined, “The economic news doesn’t generate that high water mark that everyone was expecting that would bring the Fed tightening story back into play.”
• Dow Jones Industrial Average (DJIA)- 16,846.13 (-0.13%)
• S&P 500- 1,957.22 (-0.12%)
• NASDAQ- 4,379.05 (-0.02%)
• Russell 2000- 1,180.01 (-0.23%)
• EURO STOXX 50 Price EUR- 3,233.19 (-0.59%)
• FTSE 100 Index- 6,735.12 (+0.02%)
• Deutsche Borse AG German Stock Index DAX- 9,804.90 (-0.64%)
• Nikkei 225- 15,308.49 (+0.27%)
• Hong Kong Hang Seng Index- 23,197.83 (+1.45%)
• Shanghai Shenzhen CSI 300 Index- 2,149.08 (+0.74%)
Stocks in Focus
The stock price of Alcoa Inc (NYSE:AA), the largest aluminum producer in the United States gained 2.68% to $14.93 per share after announcing its agreement to acquire Firth Rixson Limited, an aerospace-component maker for $2.85 billion in cash and stock.
According to Alcoa Chairman and CEO Kalus Kleinfeld, the acquisition will boost the company’s earnings power and broaden the market position of its high-value aerospace portfolio.
The shares of Barclays PLC (ADR) (NYSE:BCS) declined 7.38% to $14.55 per share after New York Attorney General Eric Schneiderman filed a securities fraud lawsuit on allegations that it is using predatory practices to maneuver its customer to trade on its Liquidity Cross dark pool.
Bed Bath & Beyond Inc. (NASDAQ:BBBY) fell 7.22% after the company issued lower-than-expected earnings guidance for the second quarter. The company said it might be able to deliver second quarter earnings in the range of $1.08 to $1.16 per share.