US stocks wobble after early rally

US stock index benchmarks made early gains today, boosted by rising factory orders and remarks again from the Fed’s William Dudley that stimulus could be extended if required, but dipped into the red in the early afternoon.

Car manufacturers General Motors and Ford both advanced after Ford said that said the US auto sector will report vehicle sales of 1.43 million in June, which would be the best rate since December 2007. Ford’s own sales rose 13% in June. The news helped Ford’s share price climb 2%, while General Motors was up 0.4%.

Data from the US Commerce Department showed that factory orders rose 2.1% in May, while April’s rise in orders was upwardly revised from 1% to 1.3%. Stripping out transportation equipment, which is a volatile component, new orders rose 0.6% in May. The rise in orders suggest companies are starting to invest more heavily for the future, and combined with yesterday’s ISM and PMI manufacturing reports, things look optimistic for the manufacturing sector.

President of the Federal Reserve William Dudley helped ease worries about the future of Fed stimulus last week, by making comments that the monthly asset purchases could be extended if data does not match the Fed’s forecasts. Mr Dudley re-iterated those remarks in a speech in Connecticut today.

Those comments helped push stock indices higher earlier in the day on Wall Street, but the gains were eventually given up. The Dow was trading down 0.15% just below the key 15,000 level by 2pm in New York, while the S&P 500 was flat.

With the New York Stock Exchange closed on Thursday for the US Independence day holiday, trading this week is likely to be thinner than normal, and Friday’s employment report is likely to be subject to more intense analysis than normal – any sign of deterioration would imply the Fed could extend stimulus.

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