While you were sleeping: US manufacturing contracts

Friday 2nd September 2016

Wall Street was mixed, while US Treasuries rose and the greenback fell, as a report showing a contraction in US manufacturing eased bets the Federal Reserve will raise interest rates this month. Oil prices weakened.

An Institute of Supply Management report showed US factory activity contracted for the first time in six months in August. The data heightened the already-high level of anticipation for the government’s non-farm payrolls report on Friday.

"Both the lower oil prices and the ISM show weakness in the economy," Tim Ghriskey, chief investment officer of Solaris Asset Management in New York, told Reuters. "There’s fear that there's a disconnect between what the Fed might do and what the data is showing us."

Separately, a Labor Department report showed initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 263,000 for the week ended August 27.

In 3.21pm trading in New York, the Dow Jones Industrial Average slipped 0.07 percent. However, the Nasdaq Composite Index eked out a 0.06 percent gain. In 3.06pm trading, the Standard & Poor’s 500 Index fell 0.27 percent.

In the Dow, declines in shares of American Express and those of Chevron, down 1.3 percent and 1 percent respectively, outweighed gains in shares of Wal-Mart and those of Nike, up 1.8 percent and 1.3 percent respectively.

Shares of Campbell Soup dropped, trading 6.2 percent lower as of 1.43pm in New York, after the company offered a disappointing earnings outlook as it struggles with its fresh food business, notably higher costs and lower sales for carrots.

“The performance of our Campbell Fresh business, driven predominantly by execution issues, is disappointing.” Denise Morrison, Campbell’s chief executive officer, said in a statement.

"We have taken and are taking steps designed to ensure the business performs to its potential," Morrison noted. "We remain confident in our Campbell Fresh strategy and its ability to deliver long-term growth consistent with its portfolio role, as the business remains well-positioned to capitalise on the health and well-being consumer trend."

Campbell increased its quarterly dividend by 12 percent to 35 cents from 31.2 cents, “reflecting its confidence in its long-term growth prospects.”

Meanwhile, shares of Wal-Mart gained after the company announced plans to axe about 7,000 back-office jobs.

Shares of Wynn Resorts jumped, trading 4.9 percent higher as of 3.11pm in New York, after Macau, the world's No. 1 casino hub, reported its first increase in gaming revenue in more than two years.

“We need to wait for at least one more month to see if growth can be sustained, and if new casinos will bring more visitors during the peak Golden Week,” China International Capital Corp analyst Chris Kwai told Bloomberg. “Compared with no growth or even a slight drop, a slight uptick is a big impact on market sentiment.”

In Europe, the Stoxx 600 Index finished the session with a gain of less than 0.1 percent from the previous close. France’s CAC 40 index inched 0.03 percent higher. The UK’s FTSE 100 Index slid 0.5 percent, while Germany’s DAX index dropped 0.6 percent.

BusinessDesk.co.nz

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