Growth worries start to bite

Stocks have declined steeply as a risk-off sentiment has descended on Wall Street.

It wasn’t a bad start to the trading day in New York, with stocks pushing higher on the back of a clutch of promising macroeconomic reports, but the niggling doubts over global growth concerns and the political strife in Crimea have resurfaced once again.

Not only have the gains disappeared, but the worries are biting harder than any other day this week. Losses have accelerated in the afternoon session on Wall Street, with the Dow Jones plunging 1.13% or 185 points and the S&P 500 down 0.87% at 1851.9.

The early good news came from the Commerce Department, who reported a 0.3% bounce in retail sales last month after January’s steep decline, and the US Labor Department, who revealed initial jobless claims of 315,000 last week, representing a decline of 9000.

Not so encouraging was the news that business inventories climbed 0.4% in January. While this was in line with expectations, it comes tied to a 0.6% drop in business sales, pushing the stock-to-sales ratio up to 1.32 from December’s level of 1.3, the worst that ratio has reached post-recession. Like much of January’s soft data, bad weather has no doubt had a hand in this result, but regardless of what has caused inventories to back up, the reaction could well be a slowing in production until some of that unwanted stock is burnt off.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.