US shares skid into the red, Dow back below 16,000

Stocks have given up their gains from the morning session on Wall Street, as caution tempers the recent upbeat sentiment.

The major US stock index benchmarks began brightly this morning, with the Dow Jones setting yet another a new intraday record high, and the S&P 500 nearing 1800 again, but the upward momentum petered out eventually and by early afternoon in New York the Dow was down 0.09% or 15 points at 15,961 and the S&P 500 slid 0.23% to 1787.2.

The fall in the Dow came despite some bullish quarterly figures from Home Depot, which surpassed forecasts on both the earnings and revenue front and also revised its fiscal year forecast higher. Shares in Home Depot gained more than 1%, earlier hitting an all-time high in excess of $82 per share.

I would take the company’s strong performance as a good sign about the behaviour of US consumers. There have been more than a few suggestions that consumer confidence has been ebbing of late, with widely followed indicators such as the University of Michigan’s index of consumer sentiment and the Conference Board’s consumer confidence index all pointing to a decline in consumer spirits, but heading into the crucial holiday season we have seen better-than-expected profits from Macy’s, Wal-Mart and now Home Depot. With consumer spending being the most significant contributor to GDP growth in the US economy, this is a cause for optimism.

The euro has bounced against most major currencies, after ECB Executive Board member Joerg Asmussen appeared to suggest an aggressive move by the central bank, such as negative interest rates, was unliklely. Although saying he would not rule out negative rates, MR Asmussen said he would be ‘very careful with such an instrument’. The euro gained 0.23% against the US dollar and rose to a four-year high against the yen.

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