US stocks edged lower yesterday, led by technology shares, while diminished chances of monetary stimulus from major central banks prompted investors to shy away from risky assets.
The Dow briefly moved into positive territory in sync with Procter & Gamble’s advance, with the blue-chip average bouncing off technical support at 12,500, analysts said. The S&P 500 earlier traded below its 50-day moving average at 1,334.
“We tested (1,334) and bounced, but the flavour of the market is still somewhat tenuous, given the testing of these technical support levels and also the strength in the 10-year bond,” said Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.
The benchmark 10-year US Treasury note was up 11/32 in price, with the yield at 1.482 per cent.
The Dow pared most of its loss, getting a lift from the shares of Procter & Gamble – up 4.6 per cent at $64.22 – after a source said activist investor William Ackman appears to be building a stake in the US household products company. Merck & Co. shares also bolstered the Dow. Merck’s stock rose 4.1 per cent to $42.91 after a pivotal trial of Merck’s experimental osteoporosis drug odanacatib has shown that it reduces the risk of fracture.
But overall, market sentiment was weak, especially after the lack of any monetary easing by the Bank of Japan, and few clues in the minutes from the Federal Reserve’s June policy meeting, released on Wednesday. The lack of policy moves suggested major central banks were still cautious about the need for further easing.
The Dow Jones industrial average was down 5.56 points, or 0.04 per cent, at 12,573.27. The Standard & Poor’s 500 Index was down 4.32 points, or 0.32 per cent, at 1,334.76. The Nasdaq Composite Index was down 18.84 points, or 0.65 per cent, at 2,866.19.
Technology shares have been among the worst performers recently, bogged down by profit warnings from companies such as Advanced Micro Devices and Applied Materials. For the month, the S&P technology sector is down 4 per cent and the PHLX semiconductor sector is off 8.7 per cent.
US-listed shares of Infosys tumbled 11.1 per cent to $38.80, after earlier dropping to an all-time low of $38.12. The Indian IT heavyweight cut its sales forecast more than expected as technology spending was hurt by global economic uncertainty.
There was some solace from data that showed the number of Americans applying for jobless benefits fell last week to a four-year low, though some of that improvement may be temporary. But analysts said it did little to sway the view the economic recovery has hit a soft patch.
Oil prices turned around in afternoon trading, with Brent crude jumping above $101 a barrel after the United States announced increased sanctions against Iran.