Stock markets worldwide have posted negative results yesterday while commodities slide. U.S. stocks closed lower on Thursday for the third consecutive day, after more disappointing earnings reports were released. Reports from 3M (NYSE:MMM), Caterpillar (NYSE:CAT), and American Express (NYSE:AXP) were significantly weaker-than-expected earnings, causing a selloff in the afternoon. Declines were seen most in the utilities, material and industrial stocks. The Standard and Poor’s 500 index fell 12 points (0.6%) to trade at 2102.15, the Dow Jones Industrial Average shed 119.2 points (0.7%) to trade at 17731.92, and the Nasdaq composite fell 25.36 points (0.5%) to trade at 5146.41. For the week, the Dow Jones is down 2%, while both the S&P and Nasdaq are down 1.2%. For the entire year, the Dow Jones is down 0.5%, while the S&P and Nasdaq remain up with 2.1% and 8.7% in gains, respectively.
A solid jobless claims released ahead of trading supported the belief that the U.S. economy is doing well, leading many to consider the Federal Reserve’s upcoming interest rate hike. Improving labor offers proponents of the interest rate hike more credibility and a stronger case. The latest comments from the Federal Reserve officials point towards a 1% hike in September before committing to more significant raises. Additionally, the nonfarm payroll report is calculated in part with the use of the jobless claims report, leading some analysts to expect a strong NFP report with 252,000 new jobs on August 7.
A surprise decline in Chinese manufacturing worsened the commodity rout, which has seen prices fall significantly. Copper fell to a six-year low, while gold is at its lowest since 2010. The positive jobless claims supported the notion of a U.S. interest rate hike, thus strengthening the dollar and limiting gold’s safe-haven appeal, as it suffers its longest run of losses since 2012. Crude oil tumbled past $50 per barrel and is currently trading at $48.71, after reports indicated that stockpiles have risen by nearly 2.5 million barrels last week. Currently, crude oil stockpiles are nearly 100 million barrels higher than the five year average.
Eurozone manufacturing PMI data will be released today, followed by U.S manufacturing and new home sales data. After a relatively barren week in terms of economic data releases, next week will offer numerous reports with long-reaching effects. U.S. Core durable goods orders will be released on Monday, while UK GDP and U.S. consumer confidence reports will be released on Tuesday. The Federal Reserve will meet on Wednesday, as analysts comb through all statements to find clues for when the interest rate hike will finally occur.