New York/London: Bleak data from the United States and Europe and cautious words from US President Barack Obama suggested that leading economies may not yet even be near a recovery from a global recession.
In the United States, sales of previously-owned homes rose at a lower-than-expected 2.4% pace in May, according to the National Association of Realtors.
A separate study by the Federal Reserve Bank of Richmond said the outlook of manufacturers in the US Mid-Atlantic states had cooled.
“The economy is generally improving, but maybe not according to the trajectory that the stock and commodity markets predicted,” said Andrew Brenner, senior vice president of MF Global in New York.
Economies are struggling as credit remains tight for many borrowers, companies hesitate to spend, and job losses mount.
In a news conference, Obama said “it’s pretty clear” the nation’s unemployment rate will rise above 10%, noting that economies often recover before payrolls, “and we’re still not at actual recovery.”
He also praised Federal Reserve chairman Ben Bernanke for handling the financial crisis “very well.”
Meanwhile, Boeing Co said it would again delay the first test flight of its 787 Dreamliner because of a structural problem in the aircraft. The world’s second-largest maker of planes gave no new date for the flight, which is already two years behind schedule.
Shares of technology bellwether Oracle Corp rose slightly after markets closed as its profit margin set a record and software sales fell less than expected.
In Europe, euro zone purchasing managers data released Tuesday suggest a recovery has stalled, though a manufacturing index improved as companies pared inventories.
European stocks posted their lowest close in six weeks as worries about recovery prospects hurt bank stocks. The FTSEurofirst 300 dipped 0.4%.
Federal Reserve eyed, CEOs cautious
US Treasury prices rose, as the government found strong investor demand in an auction of $40 billion of two-year notes.
The US dollar, meanwhile, fell broadly amid speculation the Fed may downplay prospects for an eventual increase in interest rates after its policy-setting committee concludes a two-day meeting on Wednesday.
Investors are focusing on whether the Fed might expand a $300 billion program of Treasury purchases, and signal how it might curtail its easy-money policy as the economy recovers.
Corporate America does not expect that to happen soon.
A Business Roundtable survey showed that half of corporate chief executives plan to cut capital spending and jobs over the next six months. The economic outlook was the third worst in the survey’s six-year history.
“The signs appear less negative than they were last quarter, but no one is ready to suggest they are going to begin hiring to start growth,” said Ivan Seidenberg, chief executive of Verizon Communications Inc and chairman of the Business Roundtable.
In the euro zone, surveys hinted that the worst of the recession has passed, but that a recovery may take time.
Consumer spending in France fell by a larger amount than expected in May. In Germany, a purchasing managers’ index showed the rate of contraction in the private sector of Europe’s largest economy accelerated in June.
A vice governor of the People’s Bank of China earlier said he hoped the country would be among the first economies to recover from the crisis.
But he cautioned that the pick-up was still not firmly anchored and expressed particular concern about a “grim” international environment for China’s exporters.
US Trade Representative Ron Kirk launched a World Trade Organization case against China, after failing to persuade the country to reduce export tariffs and raise quotas on materials such as tin, tungsten, yellow phosphorous and zinc. The European Union said it would join the action.