Cautious calm returns to Wall St

Wall Street was mixed, paring sharp early losses after disappointing data from China and a slump in Japanese stocks outweighed better-than-expected reports on US jobs and housing.

In China, the preliminary reading for a Purchasing Managers' Index of manufacturing was 49.6 in May, according to HSBC and Markit Economics data. In Japan, the Topix plunged 6.9 per cent.

Yesterday's comments by US Federal Reserve Chairman Ben Bernanke suggested the central bank might ease back its bond-buying program as soon as at its next meeting, while also stressing the risk of withdrawing stimulus measures too soon.

Fed officials today sought to soothe investors' concerns. James Bullard, president of the St Louis Fed, said he didn't think the bank's policy committee was "that close" to tapering bond purchases and when it did start to pull back it would be slowly.

"The market is struggling with conflicting language from Fed officials as to the timing of potential tapering of asset purchases, slowing growth in China and after Japan's decline in equities," Ryan Larson, the Chicago-based head of US equity trading at RBC Global Asset Management, told Bloomberg News.

In late afternoon trading in New York, the Dow Jones Industrial Average gained 0.18 per cent, while the Standard & Poor's 500 Index fell 0.22 per cent and the Nasdaq Composite Index edged up 0.04 per cent.

US economic data released today were better than anticipated, though failed to brighten the mood. Initial claims for state unemployment benefits fell 23,000 to a seasonally adjusted 340,000 last week, according to Labor Department data.

New single family home sales increased 2.3 per cent in April to a 454,000-unit pace, while the median sales price for a new home rose 14.9 per cent from a year ago to a record US$271,600.

"All the eggs are in housing and the consumers' baskets this quarter. Outside that, there is going to be little support to growth," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters.

Bucking the trend today, shares of Hewlett-Packard jumped, last up 14.7 per cent, after the computer maker lifted its 2013 earnings outlook.

"She [Chief Executive Officer Meg Whitman] clearly has the company focused on profit and cash flow and that's coming through in the earnings," Shannon Cross, an analyst at Cross Research in Millburn, New Jersey, who rates the stock a hold, told Bloomberg. "It shows they're able to drive margin at businesses that are under significant revenue pressure."

Europe's benchmark Stoxx 600 Index shed 2.1 per cent. Yesterday European shares had closed higher, ending the session before Bernanke suggested the US central bank could taper its bond-buying as soon as next month.

The UK's FTSE 100, France's CAC 40 and Germany's DAX each also closed with declines of 2.1 per cent.