World equities in holding pattern overnight

Trader Gregory Rowe, left, and specialist Peter Giacchi work on the floor of the New York Stock Exchange. Photo / AP

Wall Street was mixed after a report showed a surprise contraction for manufacturing in the New York area in August.

Separate reports showed that industrial production increased more than expected in July, while home-builder sentiment in August climbed to the highest level in more than five years.

And the consumer price index was steady in July for a second month, defying expectations for an increase - and leaving open the door for the US central bank to provide fresh stimulus to the economy.

In late afternoon trading in New York, the Dow Jones Industrial Average slipped 0.05 per cent. The Standard & Poor's 500 Index eked out a 0.04 per cent gain and the Nasdaq Composite Index rose 0.27 per cent.

"The outlook is not particularly favourable," Millan Mulraine, a senior US strategist at TD Securities in New York, told Bloomberg News. "Slowing global growth momentum will certainly eat into the global demand for US exports and manufacturing in particular."

That was clearly illustrated by Deere & Co and Staples which both posted quarterly results that fell short of expectations. Shares of Deere were last 5.9 per cent weaker, while those of Staples shed 15.1 per cent.

Staples lowered its full-year outlook for profit and sales, citing slower growth in the US and weakness in Europe.

"The weakness in Europe was not a surprise, but the deterioration in the US was more significant than anticipated," Janney Capital Markets analyst David Strasser told Reuters.

To be sure, Abercrombie & Fitch's quarterly profit surpassed estimates. The stock was last up 9.1 per cent. Shares of Target also advanced, last up 1.9 per cent, after the company lifted its annual profit forecast.

Indeed, some took the recent US economic data as an indication that the Federal Reserve is less likely to increase its monetary stimulus soon. US Treasuries declined, lifting 10-year yields toward the highest level in nearly three months.

"We definitely have seen some better economic numbers and it's put a dent in QE3 expectations," Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA, told Bloomberg. "The market's at risk for the first time in a long time."

Meanwhile, yields on German 10-year bunds rose after Bloomberg reported that European Economic and Monetary Affairs Commissioner Olli Rehn signalled Spain is weighing a request for a sovereign bailout.

"The Spanish government has an open mind on this issue, but no decision has been made" on whether to request a bailout, Rehn told Bloomberg yesterday. "We stand ready to act if there is a request."

Europe's Stoxx 600 Index edged 0.1 per cent lower from yesterday's close. Benchmark stock indexes in Germany, the UK and France declined as well.