U.S. stocks drop amid disappointing data despite positive bank earnings

U.S. stocks drop amid disappointing data despite positive bank earnings
# 17 July 2012 02:18 (UTC +04:00)
Baku-APA. U.S. stocks closed lower on Monday on slightly negative retail sales despite better-than-expected Citigroup earning report, APA reports quoting Xinhua.

According to the Commerce Department, retail sales slipped 0.5 percent in June as demand dropped from cars and electronics to building materials.

The reading was the lowest since May, 2010 and was the first time that sales had dropped in three consecutive months since late 2008.

Meanwhile, according to July Empire State Manufacturing survey in New York state by the Federal Reserve Bank, the general business conditions index rose to 7.4 from 2.3, the lowest since last November, suggesting that conditions improved modestly over the month. About a third of respondents reported better conditions, while a quarter saw them worsen.

Citigroup reported better-than-expected second quarter earnings on Monday, although its revenue missed estimates.

The third largest bank of the United States said its net income reached 2.9 billion dollars or 0.95 dollar per diluted share, beating Wall Street projection of 0.89 dollar per share.

Moreover, Federal Reserve Chairman Ben Bernanke will testify before the Senate Banking Committee and the House Financial Services Committee on Tuesday and Wednesday.

"These testimonies come just twice a year, and given that these are the last ones before the election, they will be in industry wide focus," said Stephen J. Guilfoyle, U.S. economist with Meridian Equity Partners.

He told Xinhua that traders and investors will want to see if Bernanke shies away form the Fed’s current economic forecasts, or hints on monetary policy.

When the market closed, the Dow Jones industrial average dropped 49.88 points, or 0.39 percent, to 12,727.21. The Standard & Poor’s 500 slipped 3.14 points, or 0.23 percent, to 1,353.64. The Nasdaq Composite Index fell 11.53 points, or 0.40 percent, to 2, 896.94.

In the bond market, the yields of U.S. 10-year bond dropped 2. 33 percent on Monday, an indication of investors’ concerns over future global economic development.

Oil prices rose for the fourth consecutive day on Monday as investors were awaiting remarks from Bernanke, hoping the central bank head could hint some further easing policy. Light, sweet crude for August delivery rose 1.33 dollars, or 1.53 percent to settle at 88.43 dollars a barrel on the New York Mercantile Exchange.

In London, Brent crude for August delivery also rose over 1 percent and last traded around 103.5 dollars a barrel.

Meanwhile, the U.S. dollar fell against most major currencies in late New York trading on weak economic data. The dollar index lost 0.256 to 83.218 on Monday.
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