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New York - US stocks edged higher while
caution ahead of an audit of Greece’s finances halted a three-day rally in
global stocks on Wednesday.
The euro held to slight gains and prices of commodities like oil
and copper fell.
Following its best day in a year and a half, an index of world
stocks dropped as investors awaited news on whether Greece will be allowed
another round of aid in order to avoid a default.
The European Union confirmed negotiators would return to Greece
this week to discuss issuing its next tranche of aid. Investors will remain
focused on Europe as the region’s sovereign debt crisis spooks the regional
economy and threatens banks across the euro zone and beyond.
“The price action in the markets suggests that the patience of
investors is wearing thin,” said Kathy Lien, director of currency research at
GFT Forex.
It has been widely expected that the EU, IMF and European Central
Bank would eventually approve the release of money Greece needs to avoid
default. But after a boost to commodities and equities in the past days, markets
acknowledge the risk is that optimism has been premature.
“It is certainly interesting that we had that nice rally (in U.S.
stocks) yesterday and gave it all back late afternoon,” said Frank Lesh, a
futures analyst and broker at FuturePath Trading LLC in Chicago.
“It just shows how nervous the markets are and it is tough to
commit; we will probably continue like this until there is a little more clarity
(in Europe), and who knows when that comes.”
Close to noon in New York, the Dow Jones industrial average was up
37.08 points, or 0.33%, at 11 227.77. The Standard & Poor’s 500 Index
was down 0.93 points, or 0.08%, at 1 174.45. The Nasdaq Composite Index
was down 4.85 points, or 0.19%, at 2 541.98.
U.S. stocks were supported by data showing new orders for
long-lasting U.S. manufactured goods slipped less than expected in August while
a rebound in a gauge of business spending supported views the economy would
likely avoid another recession.
An index of world stocks fell 0.5% after rising more than 3% on Tuesday --its largest daily percentage advance since mid-May 2010.
Equity markets have rallied over the past few sessions on
expectations European officials will aggressively tackle the debt crisis by
boosting the euro zone’s €440bn rescue fund, known as the EFSF.
But an increase in the EFSF faces opposition in Germany and there
are signs of a split within the currency bloc over the terms of Greece’s next
bailout.
Benchmark U.S. Treasury yields edged above 2% before a $35bn sale of five-year notes. The less-pessimistic U.S. data added to hopes
for bold steps to combat Europe’s debt crisis, keeping a lid on demand for
safe-haven bonds.
U.S. 10-year Treasury prices fell 22/32 of a point to yield 2.056%.
While the euro briefly turned negative against the U.S. dollar, it
was supported by the Greece headlines and by data showing inflation in Germany
ticked up, which should ease pressure on the European Central Bank to lower
rates. The single currency had previously hit a one-week high versus the
greenback.
