Wall Street moves lower

Traders work on the floor of the New York Stock Exchange. Photo / Getty Images

Wall Street slipped from record highs, while oil prices also declined.

Investors are focused on the latest US jobs data, with Friday's government nonfarm payrolls report expected to show a gain of 185,000 positions expected, according to a Bloomberg poll.

Federal Reserve policy makers are expected to raise their target interest rate when they next meet in June. Inflation, however, remains a concern.

A Commerce Department report showed the core personal consumption expenditures price index, an inflation measure closely watched by the Fed, slipped to a year-on-year pace of 1.5 per cent last month, down from the 1.6 per cent rate in March.

"It likely will be appropriate soon to adjust the federal funds rate," Fed Governor Lael Brainard said in a speech in New York. Even so, she warned, "if the soft inflation data persist, that would be concerning and, ultimately, could lead me to reassess the appropriate path of policy."

A separate Commerce Department report showed that consumer spending rose 0.4 per cent in April, following after an upwardly revised 0.3 per cent increase in March.

Meanwhile, a Conference Board report showed its consumer confidence index declined to a reading of 117.9 in May from 119.4 in April.

"Fed officials can continue with their gradual pace of rate hikes in June as the economy remains on course for stronger growth this quarter and throughout the rest of the year," Chris Rupkey, chief economist at MUFG Union Bank in New York, told Reuters.

Dallas Fed President Robert Kaplan, in an interview with CNBC, said he foresees two more interest rate increases in 2017 and a start to the process of unwinding the Fed's US$4.5 trillion bond portfolio.

"Two things drive GDP: growth in the labour force and growth in productivity," Kaplan told CNBC. "The problem is labour force growth is very sluggish. And my own judgement and our economists at the Dallas Fed think it's going to continue to be sluggish the next 10 years because the population is aging and labour force growth therefore is slowing."

Wall Street moved lower. In 3.06pm trading in New York, the Dow Jones Industrial Average fell 0.2 per cent, while the Nasdaq Composite Index slipped 0.1 per cent. In 2.52pm trading, the Standard & Poor's 500 Index eased 0.1 per cent.

On Monday US financial markets had been closed for the Memorial Day holiday.
The Dow moved lower as declines in shares of Goldman Sachs and those of JPMorgan Chase, down 2 per cent and 1.7 per cent respectively, outweighed gains in shares of Verizon and those of 3M, recently up 1.9 per cent and 0.9 per cent respectively.

In Europe, the Stoxx 600 Index ended the day with a 0.2 per cent decrease from the previous close. Germany's DAX Index fell 0.2 per cent, the UK's FTSE 100 Index shed 0.3 per cent, while France's CAC40 Index declined 0.5 per cent.

A European Commission report showed its index of executive and consumer sentiment declined for the first time this year, sliding to 109.2 in May from a revised 109.7 in April.

Even so, many are increasingly bullish on the outlook for the eurozone economy.

"Europe will grow as fast as the US if not faster this year, which is a big surprise," Larry Fink, BlackRock chief executive officer, said during an investing conference in New York, Bloomberg reported. US growth in the "mid-2s is not happening," while Europe will likely grow at the mid-2.5 per cent rate this year, Fink noted.