Friday, 16 August 2013

Markets fall on positive economic data

US stocks tumbled on Thursday with the S&P 500 falling 1.4 percent.

US Treasuries also fell. Ten-year note yields rose five basis points to 2.77 percent, hitting 2.82 percent at one point on Thursday, the highest since August 2011.

The fall in US markets came as relatively positive economic data on Thursday increased the likelihood of the Federal Reserve tapering its rate of bond purchases soon.

The National Association of Home Builders/Wells Fargo housing market index rose three points to 59 in August. This was its fourth consecutive monthly gain and brings the index to its highest level in nearly eight years.

Initial claims for state unemployment benefits fell 15,000 to 320,000 last week, the lowest level since October 2007.

The consumer price index rose 0.2 percent in July. This brought the 12-month increase in the CPI to 2.0 percent, the largest increase since February, from 1.8 percent in June.

Less positive, however, were data on Thursday on manufacturing.

The Fed reported that manufacturing output fell 0.1 percent last month, leaving industrial output unchanged in July.

The New York Federal Reserve reported that its Empire State general business conditions index fell to 8.24 in August from 9.46 in July.

The Philadelphia Federal Reserve reported that its business activity index fell to 9.3 in August from 19.8 in July.

US markets were not the only ones falling on Thursday. The STOXX Europe 600 fell 1.1 percent, with the UK's FTSE 100 in particular falling 1.6 percent.

Like the US, the fall in UK stocks followed good news on its economy. UK retail sales jumped 1.1 percent in July, pushing the annual rise to 3.0 percent, the highest since January 2011.

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