NEW YORK: US stocks closed mostly lower on Tuesday (May 31), ending the month on a cautious note as investors weighed economic news with prospects for a Federal Reserve interest rate increase in two weeks.
Despite a dip in consumer confidence, the day’s batch of data was mostly encouraging about the state of the economy, from rising home prices to a sharp jump last month in consumer spending, the main driver of growth.
The Fed has signalled a rate hike could be possible at its Jun 14-15 meeting, though markets are betting the central bank will wait until the July meeting.
The Dow Jones Industrial Average fell 88.09 points (0.48 per cent) to 17,787.13. Monday was a holiday on Wall Street.
The broad-market S&P 500 slipped 2.11 points (0.10 per cent) to 2,096.95, while the tech-rich Nasdaq Composite rose 14.55 points (0.29 per cent) to 4,948.05.
“With a pretty heavy plate of economic figures coming, capped off by the job numbers on Friday, traders are playing a little defence today,” said Michael James of Wedbush Securities. He said investors generally were looking to take profits following last week’s solid gains.
Chris Low at FTN Financial said the better-than-expected April consumer spending numbers set the bar for second-quarter consumption data.
“It’s now looking really good,” he said. “Obviously that opens the door for the Fed if they’d like to raise rates as early as the June meeting.”
Consumer-linked shares on the Dow fell: Home Depot lost 0.9 per cent, Nike 1.7 per cent and Disney 1.1 per cent.
Dow member Boeing sagged 2.4 per cent. The aerospace giant announced Friday a delay in the delivery of the first KC-46 tanker aircraft to the Air Force to August 2017 from March 2017.
US electricity utility Great Plains Energy tumbled 5.9 per cent after announcing it would buy Westar Energy for US$8.6 billion, creating a company serving 1.5 million customers in the Midwest. Westar gained 6.4 per cent.
Celator Pharmaceuticals soared 71.6 per cent after it agreed to be acquired by Ireland-based Jazz Pharmaceuticals for US$30.25 in cash, or about US$1.5 billion. Jazz dropped 0.4 per cent.
Activist investor Carl Icahn revealed Tuesday a “large” stake in Botox maker Allergan, without disclosing the size. Allergan shares edged down 0.1 per cent.