Sun, May 18, 2014 - Page 15 News List

US equities finish week flat as bond yields raise anxiety

AFP, NEW YORK

After notching records on Monday and Tuesday, US equity markets finished the week essentially flat, but with some observers speaking anxiously about weakening sentiment.

“I’m getting a worried vibe,” BMO Private Bank chief investment officer Jack Ablin said.

A Friday afternoon stocks rally enabled the markets to claw their way back to even terms for the week after losses looked likely earlier in the day.

The Dow Jones Industrial Average fell 92.03 (0.55 percent) to

16,491.31 over the week, as the tech-rich NASDAQ Composite

Index rose 18.72 (0.46 percent) to 4,090.59 and the broad-based

S&P 500 shed less than a point to close at 1,877.86.

Analysts were especially troubled by a retreat in bond yields, which suggests a slowing economy.

The 10-year US Treasury closed the week at 2.52 percent, down from 3.03 percent at the end of last year.

The week was fairly light in terms of US economic data, but the few reports released were lackluster. Particularly disappointing

was Tuesday’s report on last month’s retail sales, which rose just 0.1 percent.

Friday’s report on home construction was mixed. Total housing

starts rose 13.2 percent last month, but most of the gains were in the often volatile multi-family units, while the rise in the economically more important singlefamily home sector was weak.

Ablin called an earnings report from Wal-Mart Stores Inc “really disturbing,” given the retail giant’s unparalleled reach among US consumers.

Wal-Mart’s first-quarter earnings fell 5 percent from a year ago to US$3.6 billion, missing expectations as comparable sales in the US from its Walmart stores and Sam’s Club warehouses fell.

The company also offered a disappointing profit forecast.

Wal-Mart attributed the weak performance to a severe winter that depressed store traffic and forced the firm to spend millions on snow removal and heating.

Other earnings were better.

Cisco Systems Inc beat expectations and gave an encouraging

outlook on business conditions in the US and Europe, while Retailers J.C. Penney Co Inc and Nordstrom Inc also outperformed. General Motors Co on Thursday announced that it was recalling nearly 3 million vehicles. On Friday, US regulators imposed a record US$35 million fine on the firm for failing to promptly recall cars with fatal ignition faults.

Next week’s calendar includes earnings from several leading retailers, new and existing home sales data and the minutes of the US Federal Reserve’s monetary policy meeting last month.

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