Futures Lose Early Gains on Disappointing Housing, Inflation Data


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Stock futures lost altitude following May housing and inflation data, drifting back into negative territory. Prior to the 8:30 ET data, futures were cautiously higher as geo-political jitters over Iraq, Ukraine and Argentina abated as Wall Street seemed ready to focus instead on the U.S. economy and its resilience to global shocks. But the fragile gains quickly evaporated with investors unnerved by the sharper than expected drop in housing starts and increased inflationary pressures that could alter Fed outlook on future rate hikes.

May starts fell 6.5% to an annually adjusted pace of 1.00 million, missing estimates for a 3.3% decline to 1.036 million. Permits were equally soft and fell under 1 million in May to 991,000, a 6.4% drop from the month prior, versus the consensus estimate for a 1.7% drop. In addition April permits were revised downward, from 1.08 million to 1.06 million.

Consumer prices rose 0.4% in May, more than twice what the street expected. Excluding the volatile food and fuel sector, consumer prices were up 0.3%, beating estimates for a 0.2% gain.

The FOMC meeting kicks off Tuesday and concludes Wednesday, at which time the board will announce their decision on monetary policy and plans for continued reduction of quantitative easing. The expectation for the FOMC to shave another $10 billion off asst purchases in respect of current favorable economic conditions will help underpin the equity markets, but the headlines from overseas could continue to spook nervous investors.

-Dow Jones Industrial down 0.26%

-S&P 500 futures down 0.22%

-Nasdaq 100 futures down 0.13%


Nikkei up 0.29%

Hang Seng down 0.42%

Shanghai Composite down 0.92%

FTSE-100 down 0.26%

DAX-30 up 0.03%


(+/-) Large cap tech: mixed

(-) Chip stocks: lower

(+/-) Software stocks: flat

(-) Hardware stocks: lower

(-) Internet stocks: lower

(+) Drug stocks: higher

(-) Financial stocks: lower

(-) Retail stocks: lower

(-) Industrial stocks: lower

(+) Airlines: higher

(+/-) Autos mixed


(+) MDT (+2.78%) Upgraded to Outperform at Credit Suisse and Overweight at Morgan Stanley

(+) YGE (+3.98%) Reported better than expected revenue

(+) NBY (+7.58%) Received favorable coverage in an eye-health magazine

(+) BTUI (+19.93%) Raises Q2 revenue guidance

(+) FST (+14.93%) Sabine Oil & Gas LLC affirms committed financing fully in place for transaction


(-) YHOO (-0.32%) Alibaba missed earnings

(-) KONA (-1.35%) Plans offering of 2.3 mln shares common stock

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Commodities

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