Global shares, dollar skid on weak U.S. economic data

Wed Oct 14, 2015 4:38pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Global equity markets slid for a second day and the dollar sank to a seven-week low on Wednesday as weak U.S. retail sales and a drop in producer prices boosted expectations the Federal Reserve will not raise interest rates until next year.

Mixed earnings from major U.S. banks, limp inflation figures from China and further declines in commodities also helped dampen the appetite for stocks and the dollar.

U.S. retail sales rose 0.1 percent last month as cheaper gasoline weighed on service station receipts, while sales in August were revised down to unchanged from a prior rise of 0.2 percent, the Commerce Department said.

In a separate report, producer prices fell 0.5 percent last month, the largest drop since January, the Labor Department said. The index fell 1.1 percent in the 12 months through September, its eighth straight 12-month decrease.

The two reports suggested the U.S. economy may be losing momentum in the face of slowing global growth and a strong dollar. U.S. job growth braked sharply in the past two months.

"There's some disappointment about the retail number and the mixed picture in banks," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.

"We're in that point where we rallied off the low and the next step is less certain. The corporate earnings will probably help decide it, but we're only at the beginning of the reporting period," Meckler said.

The reaction to retail sales may be overdone, as on a year-over-year basis, the data shows the American consumer is doing just fine, said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.   Continued...

Traders work on the floor of the New York Stock Exchange September 23, 2015. REUTERS/Brendan McDermid