Wall Street fades in late trade; bonds fall

Tue Aug 14, 2012 5:25pm EDT
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By Richard Leong

NEW YORK (Reuters) - Wall Street stocks ended little changed on Tuesday after early gains supported by stronger-than-expected U.S. retail sales numbers faded, while oil prices rose on tepid growth data in Europe that underpinned hopes for fresh monetary stimulus.

A rise in U.S. retail sales in July, the first increase in four months, added to uncertainty in the bond market over whether growth has slowed to the point at which the U.S. Federal Reserve is likely to launch a new round of stimulus when it meets next month. Treasury prices fell.

Prices of German government bonds also fell after data showed that France and Germany, the euro zone's two biggest economies, had withstood a contraction in the currency bloc in the second quarter.

The U.S. retail sales data propelled gains in the dollar against the yen and pushed down the price of gold.

Analysts have expected equities would struggle to move higher from current levels on low volume as traders hope for new easing measures from U.S. and European central bankers.

"There was a bit of a late skid into the close. It could simply be some profit-taking. We have had a good rally," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.

The S&P 500 is within a stone's throw of new four-year highs, leaving investors looking for new catalysts to move the market higher. Traders reckon the latest batch of weak data from Europe would pressure the European Central Bank, the Fed or both to act.

The economy of the 17-nation euro zone contracted by 0.2 percent in the second quarter, although Germany eked out growth of 0.3 percent. But even there, a forward-looking sentiment indicator pointed to poorer performance ahead.   Continued...

Traders work at their desks in front of the DAX board at the Frankfurt stock exchange February 2, 2012. REUTERS/Alex Domanski