Stocks Slip Ahead of G-7 Meeting
U.S. stocks were trading flat to lower Tuesday morning ahead of a report that is expected to show another set of weak economic data, this time in the form of slowing growth in the domestic services industry.
Investors were also awaiting developments from a meeting of G-7 finance chiefs Tuesday as Spain asked for help to shore up its banks.
The Dow Jones Industrial Average was down 16.6 points, or 0.1%, at 12,085. The S&P 500 was falling 1.3 points, or 0.1%, at 1277, and the Nasdaq was lower by 1.5 points, or 0.04%, at 2758.
U.S. stocks struggled to eke out gains Monday after a larger-than-expected drop in factory orders compounded concerns over a stagnating job market and a global economic slowdown.
The economic calendar in the U.S. Tuesday includes the Institute for Supply Management’s services index for May at 10 a.m. EDT. The consensus estimate is for a reading of 53.1, according to Briefing.com, down from 53.5 in April. A reading above 50 indicates expansion.
Financial policy makers from the G-7 countries are to hold a conference call Tuesday to discuss the European debt crisis, according to Canadian Finance Minister Jim Flaherty. As the G-7 gets ready to hold its meeting, Spain’s Treasury Minister Cristobal Montoro warned that soaring borrowing rates for the government — thanks to Spain’s banking crisis — have effectively been shutting off the eurozone’s fourth largest economy from the credit markets.
He pleaded that European funds be used to bolster the country’s banks.
The DAX in Germany was down 0.9%. The London Stock Exchange was closed to mark the Queen’s Diamond Jubilee.
Activity in the eurozone’s manufacturing and services sectors continued to fall in May, according to the Markit Eurozone purchasing managers composite output index. The final reading came in at 46 in May, down from 46.7 in April, the steepest rate of decline in the single currency area since Jun. 2009.
The final Markit eurozone services business activity index fell to a seven-month low of 46.7 in May from 46.9 in April.
The Hang Seng Index in Hong Kong finished up 0.4% and the Nikkei in Japan rose 1%.
The July crude oil contract was off 11 cents at $83.87 a barrel. August gold futures were rising $5.50 to $1,619.40 an ounce.
“There remain downside risks as the Spanish and Portuguese banking sectors face multiple defaults without continued aid,” said Addison Armstrong, senior market research director at Tradition Energy.
The benchmark 10-year Treasury was rising 5/32, diluting the yield to 1.5%. The dollar was up 0.3%, according to the dollar index.
In corporate news, Chesapeake Energy (CHK) settled a campaign raised by activist investor Carl Icahn to give shareholders of the struggling oil and gas company four board seats. Chesapeake said following “extensive discussions” with its two largest shareholders, Southeastern Asset Management and Icahn, it has agreed to add four new independent directors to replace four existing independent directors who will resign from Chesapeake’s board.
Exxon Mobil (XOM) is considering exporting liquefied natural gas from the United States, according to reports.
Asked whether Exxon planned to export LNG from the United States, CEO Rex Tillerson toldReuters: “We are studying it.” Exxon is North America’s largest natural gas producer.
FedEx (FDX) announced Monday it is raising its quarterly dividend by a penny to 14 cents a share. The dividend is payable on July 2.
Google (GOOG) will buy Silicon Valley startup Meebo. Meebo boasts 100 million monthly active users.
“We are always looking for better ways to help users share content and connect with others across the Web, just as they do in real life,” Google said in a statement. “With the Meebo team’s expertise in social publisher tools, we believe they will be a great fit with the Google Plus team.” Terms of the deal weren’t disclosed, but reports last month put the price tag at about $100 million.