Reuters: US Dollar Report: GLOBAL MARKETS-Wall St slips on Macy's; European shares, sterling gain

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GLOBAL MARKETS-Wall St slips on Macy's; European shares, sterling gain Aug 14th 2013, 16:26 Wed Aug 14, 2013 12:26pm EDT * Weak Macy's earnings results weigh down U.S. stocks * European shares edge toward 2013 high after stronger data * Copper gains on growth optimism about Europe, China By Wanfeng Zhou NEW YORK, Aug 14 (Reuters) - Wall Street stocks fell on Wednesday, dragged down by weak earnings from department store Macy's, but European shares rose to 2-1/2 month highs after data showed the euro zone emerged from recession in the second quarter. The euro slipped despite the encouraging euro zone economic data as higher U.S. bond yields buoyed the dollar, while sterling jumped after robust U.K. jobs data cast doubt on the Bank of England's pledge to keep interest rates low. Macy's reported a sales and profit miss in the second quarter and cut its full-year earnings forecast. The chain was forced to discount items as consumers limited their spending on non-essential goods. Macy's stock fell 4.2 percent to $46.47, and was the largest percentage decliner on the S&P 500. The S&P's consumer discretionary sector was down 0.8 percent. Trading volume has been among the lowest of the year, as earnings season winds down and investors try to determine when the Federal Reserve will start scaling back its stimulus. Data on Wednesday added to worries that inflation is running too low. "Everyone keeps talking about tapering and any data that could be negative for the U.S. economy will push tapering out further," said Angel Mata, managing director of equity trading at Stifel Nicolaus Capital Markets in Baltimore. The Dow Jones industrial average dropped 83.02 points, or 0.54 percent, to 15,367.99. The Standard & Poor's 500 Index fell 6.47 points, or 0.38 percent, to 1,687.69. The Nasdaq Composite Index slipped 9.77 points, or 0.27 percent, to 3,674.67. Apple Inc was one of the biggest gainers of the day, rising 2.0 percent to $499.59 to extend a rally that began on Tuesday after activist investor Carl Icahn tweeted that he had built a "large position" in the tech company. Europe's FTSEurofirst 300 rose 0.3 percent to 1,240.63, within sight of its 2013 peak at 1,258.09. The economies of Germany and France grew more quickly than expected in the second quarter, bettering a widely heralded expansion in the United States and pulling the euro zone out of a 1-1/2-year recession, data showed on Wednesday. MSCI's all-country world index, a measure of 45 equity markets around the world, rose 0.05 percent. The euro traded 0.1 percent lower at $1.3252, while the dollar edged slightly lower at 98.18 yen. Sterling hit a high of $1.5548 after data showed a sharp drop in jobless benefit claims in July and minutes from the central bank's last meeting revealed one policymaker had voted against a historic move to tie future interest rates to unemployment. It was last up 0.5 percent at $1.5519. The minutes and stronger labor market data prompted money market traders to price in a greater chance of a rate hike in the bank's base rate in two years - a year earlier than the BoE has signaled. Yields on benchmark U.S. 10-year Treasuries, which have been supporting the U.S. currency, edged down to around 2.7154 percent, just off Tuesday's near two-year peak of 2.72 percent . Investors have largely positioned for the Fed to start tapering its $85 billion per month of bond purchases soon, but are looking for more data to support that view. Talk about the Fed's next step escalated on Tuesday when Atlanta Fed President Dennis Lockhart said it was too early to detail plans for reducing bond buying, while at the same time he did not rule out the possibility of it starting next month. His suggestion that any move would be neither nor drastic boosted sentiment in U.S. stock markets that carried into Asian trade, helping Japan's benchmark Nikkei stock average to finish at a one-week high. Copper prices rose as optimism about the euro zone economy and top metals consumer China boosted confidence about demand for industrial materials. Three-month copper on the London Metal Exchange traded at $7,300 in official rings, up from a close of $7,275 on Tuesday. Spot gold rose to $1,332 an ounce from around $1,320. Brent rose 24 cents to $110.04 a barrel, while U.S. oil fell 19 cents to $106.64. Link this Share this Digg this Email Reprints

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