New York: US stocks and oil prices turned south on Friday as investors questioned recent rallies in the face of economic data that still shows a mixed picture of when economies will rise from a deep global recession.
The dollar and yen rose as worries persisted about global economic prospects despite a batch of better-than-expected US economic data, prompting investors to seek shelter in the two safe-haven currencies.
Gold climbed to a six-week high after data showed US core inflation rose more than expected in April, boosting the precious metal’s appeal as a hedge against rising prices.
Oil fell toward $56 a barrel, pressured by weak global demand and a stronger dollar.
Europe sank to what may have been the recession’s low point in the first quarter of this year as tumbling German exports and investment plus further sharp drops in output elsewhere hastened the pace of a year-old contraction.
Official GDP estimates showed the period was the worst since records at the European level began in 1995.
“Overall risk appetite is still down because of the bad numbers from Europe,” said Matthew Strauss, senior currency strategist at RBC Capital, in Toronto.
European shares closed higher, with gains for most banks outweighing losses for defensive plays such as telecoms.
But US stocks turned lower after earlier gains due to the expiration of option contracts and a fresh assessment of a jobs report on Thursday that was worse than expected, said Rick Meckler, president of LibertyView Capital Management in New York.
Shortly after 1:30pm, the Dow Jones industrial average fell 46.43 points, or 0.56%, to 8,284.89. The Standard & Poor’s 500 Index shed 8.77 points, or 0.98%, to 884.30. The Nasdaq Composite Index slipped 4.02 points, or 0.24%, to 1,685.19.
The FTSEurofirst 300 index of top European shares rose 0.5% to close at 839.94 points. Over the week, the index fell 3.1%, but is up 30% from a lifetime low on 9 March.
But analysts were skeptical about when, and how strongly, an economic recovery will come through.
US and euro-zone government debt slipped after US industry and consumer sentiment reports bolstered hopes the economy might soon start to recover.
US industrial production fell 0.5% in April, a more modest pace than in recent months and less than the 0.6 percent economists had expected.
The data dimmed the allure of safe-haven investments such as US Treasuries. Separate reports showing improved national consumer sentiment and a slower rate of contraction in New York state manufacturing this month also trimmed flight-to- safety bids.
The dollar rose against a basket of major currencies, with the US Dollar Index up 0.41% at 82.777.
The euro fell 0.80% at $1.3524. Against the yen, the dollar was down 1.04% at 94.87.
US light sweet crude oil fell $2.06 to $56.56 a barrel.