Wall Street still in decline

There’s no bounce yet, as stocks continue to fall on Wall Street after the Dow’s worst week in more than two years.

The flow of news today has been fairly encouraging, but it hasn’t been quite enough to fully staunch the wounds inflicted on the US stock market last week by fears over China’s outlook and weakness in emerging markets.

Housing has been a bright spot for the US economy for a couple of year now, but new homes sales seem to have been adversely affected by bad weather conditions at the tail end of last year, with December sales falling to an annualised rate of 414,000 from a downwardly-revised rate of 445,000 in November. This was below expectations, with higher house prices no doubt having played a part in slowing sales.

More promising was the latest regional survey from the Dallas Fed, which # shows activity in the manufacturing sector expanding again this month, the ninth consecutive increase in growth. The Dallas Fed manufacturing survey rose to 3.8 in January from the 3.1 seen in December, while the survey’s production index rose to 7.1 and the new order component jumped from a December reading  of 1.3 to a seventh-month high of 14.4; such signs of strong demand bodes well for output next month.

Earnings have been a little more bullish today. Construction bellwether and Dow component Caterpillar rose 4.7% after announcing better-than-expected quarterly profit . CEO and chairman Doug Oberhelman said he sees ‘signs of improvement in the world economy’ but also added that the company would continue to cut costs this year in response to falling revenue.

By early afternoon in New York, the Dow Jones had fallen 0.24% or 38 points to 15,841 and the S&P 500 dropped 0.48% to 1781.6.

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