The stock markets in the United States declined primarily due to the weaker than expected manufacturing data and standstill debt talks between Greece and its international creditors.
Today, the Federal Reserve reported that the industrial production declined 0.2% in May, which was caused by the weakening of military hardware and non-durable goods such as food and fuel.
John Ryding, chief economist at RDQ Economics, told Bloomberg, “The big picture is that manufacturing activity has gone nowhere” although data for non-durables tend to be noisy. He added that “manufacturing was a big source of economic activity in 2014, and now it’s not contributing at all in 2015.”
On the other hand, Aneta Markowska, chief U.S. economist at Societe Generale commented, “Manufacturing activity is still in the recovery process from the impact of the strong dollar and the impact of the cuts in the oil and gas space, and we haven’t fully worked through those effects yet. I would expect some rebound. We’ve had stronger demand domestically, and that should offer some lift to manufacturing.”
The National Association of Home Builders/Wells Fargo builder sentiment index climbed to 59% this month, the strongest level since September. It was also higher that the 54% estimate recorded in a Bloomberg survey.
Meanwhile, the latest round of debt negotiations between Greece and its international creditors faltered. The situation reignited concerns regarding the possibility that Greece would default and exit from the Eurozone. The finance ministers of the European Union are scheduled to decide on the matter on June 18.
In a note to investors, Jim McCormicj of Barclays said, Greece concerns [are] rattling the markets. Global markets have started the wheel on a softer note after talks on the Greece bailout broke down on Sunday.”
- Dow Jones Industrial Average (DJIA) – 17,791.17 (-0.60%)
- S&P 500- 2,084.43 (-0.46%)
- NASDAQ- 5,029.97 (-0.42%)
- Russell 2000- 1,261.26 (-0.30%)
- EURO STOXX 50 Price EUR- 3,438.07 (-1.85%)
- FTSE 100 Index- 6,710.52 (-1.10%)
- Deutsche Borse AG German Stock Index DAX- 10,984.97 (-1.89%)
- Nikkei 225- 20,387.79 (-0.09%)
- Hong Kong Hang Seng Index- 26,861.81 (-1.53%)
- Shanghai Shenzhen CSI 300 Index- 5,538.77 (-0.12%)
Stocks in Focus
The stock price of Cigna surged more than 11% to $153.43 per share. Anthem was reportedly considering to take over Cigna as the health industry is poised to experience a wave of consolidation. The shares of Anthem rose more than 2% to $164.46 per share.
Standard Pacific gained more than 5% to $8.83 per share. The company agreed to merge with the Ryland Group to create the fourth largest homebuilding company. The shares of Ryland Group also climbed over 5% to $45.02 per share.
The shares of Micron Technology dropped more than 3% to $24.24 per share. Analysts at Morgan Stanley downgraded their rating on the stock to Underweight and reduced their price target to $21 per share. The analysts explained that the downgrade was based on their expectation that the company’s earnings strength will not come until the fourth quarter of later due to its excessive inventories.