World stock markets pause amid growth concerns
By Ryan Vlastelica
NEW YORK (Reuters) - World stock markets mostly dipped on Tuesday as investors sought new catalysts to extend a rally amid signs of tepid economic growth, though Wall Street held mostly steady on expectations for continued stimulus from the Federal Reserve.
While accommodative policies from central banks around the world have boosted markets this year, market participants have grown concerned that the rally may have been overdone. In a sign that weakness may be ahead, the Paris-based Organization for Economic Cooperation and Development cut its 2014 forecast for global economic growth to 3.6 percent from the 4.0 percent it saw in May.
The outlook change followed negative comments from activist investor Carl Icahn, who on Monday told Reuters there was a chance the stock market could face a "big drop," citing weak earnings growth.
Separately, short-seller Jim Chanos told Reuters that he was bearish on oil and coal companies, a sector tied to the pace of economic growth.
Despite that, the Fed's bond-buying program, which is providing $85 billion of liquidity a month, is seen providing a floor to equity prices, though investors are keen for clues of when the Fed will begin to scale back the program.
"I'd say there's a very low probability the Fed does anything between now and the end of the year," said Dan Veru, who oversees $4.5 billion as chief investment officer of Palisade Capital Management in Fort Lee, New Jersey, adding that markets would "drift up" through then.
MSCI's world equity index .MIWD00000PUS, which tracks shares in 45 countries, fell 0.3 percent, after hitting a six-year peak on Monday.
The Dow Jones industrial average .DJI was down 1.63 points, or 0.01 percent, at 15,974.39. The Standard & Poor's 500 Index .SPX was down 2.44 points, or 0.14 percent, at 1,789.09. The Nasdaq Composite Index .IXIC was down 10.57 points, or 0.27 percent, at 3,938.50. Continued...