U.S. Stocks Open Lower, Extending Losses
By Nathan Allen
U.S. stocks opened lower Wednesday, a day after breaking a weeklong winning streak amid lingering trade tensions and questions over the direction of Federal Reserve policy.
The Dow Jones Industrial Average fell 15 points, or less than 0.1%, to 26033 shortly after the opening bell and the S&P 500 dropped 0.1%. Both indexes fell less than 0.1% on Tuesday. The Nasdaq Composite declined 0.3%.
Equity markets in the U.S. had risen sharply in the prior week after Federal Reserve officials hinted that the central bank might lower interest rates to offset the negative effects of trade disputes. However, some analysts say markets may have overestimated the likelihood of such a rate cut, given recent positive economic data.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said heightened expectations of a rate cut may now force the Fed to act sooner than intended to avoid disappointing the market and driving up stock-market volatility over the summer.
U.S. consumer prices inched up in May, held down by a decline in energy prices. The consumer-price index rose a seasonally adjusted 0.1% in May from the previous month, the Labor Department said Wednesday. Excluding volatile food and energy prices, costs were also up 0.1% on the month.
The report is an indication that inflation pressures remain muted despite a strong labor market that is starting to deliver wage gains for workers.
In Europe, the Stoxx Europe 600 was down 0.6% in midday trade.
Global oil benchmark Brent crude traded down 1% at $61.23 a barrel after data from the American Petroleum Institute showed that U.S. crude stockpiles climbed more than expected last week, implying weakening demand. The U.S. Energy Information Administration is due to release its own report later today, which will likely confirm the trend, according to Oanda senior market analyst Craig Erlam.
"Estimates suggest we may see a slight drawdown but that's very much at odds with the near-five million barrel build that API reported," he said.
Germany's Axel Springer was the biggest gainer on the pan-European index after U.S. private-equity firm KKR bid EUR63 a share for the media group.
In Asia, China's Shanghai Stock Exchange dropped 0.6%, Korea's Kospi fell 0.1% and Japan's Nikkei 225 fell 0.4%
Hong Kong's Hang Seng was the region's worst performer, dropping 1.7% as protesters blocked access to the legislature, forcing lawmakers to postpone debate on an unpopular bill that would allow people to be extradited to China.
Property developers led the declines in Hong Kong after Chinese developer Goldin Financial on Tuesday pulled its $1.4 billion winning bid to redevelop a former airport, citing "social contradiction and economic instability."
The property subindex of the Hang Seng fell 2.8% and major builders such as Sun Hung Kai and Henderson Land dropped between 2% and 3%.
The yield on 10-year U.S. Treasurys slipped to 2.137% on Wednesday from 2.140% on Tuesday. Bond yields move in the opposite direction to prices.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was flat at 96.77.
Joanne Chiu contributed to this article.