US equities slip from records overnight

Trader Greg Mulligan works on the floor of the New York Stock Exchange. File photo / AP

Wall Street eased from record highs overnight, even as more indicators point to a broadening of the economic recovery, as investors assessed whether equity valuations were rising at a reasonable rate.

In the final hour of trading in New York, the Dow Jones Industrial Average slipped 0.07 per cent, as did the Nasdaq Composite Index, while the Standard & Poor's 500 Index fell 0.12 per cent.

In the Dow, declines in shares of IBM, down 1.1 per cent, and those of United Technologies, down 0.8 per cent, outweighed gains in shares of Intel, up 1.3 per cent, and those of Cisco, up 0.8 per cent.

"People are looking for reasons to really buy, but we're optimistic that equities can continue to push higher," David Carter, chief investment officer of Lenox Wealth Advisors in New York, told Reuters.

The latest reports on the American economy underpinned recent signs that the recovery is gathering speed. Wholesale inventories rose a larger-than-expected 1.1 per cent in April, while separate reports showed that job openings climbed by 289,000 to a seasonally adjusted 4.46 million in April, the highest level since August 2007, and the NFIB's small business optimism index in May posted its highest reading since September 2007.

"The list of indicators showing the economy is back continues to get longer every day," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York, told Reuters. "It's getting harder and harder to point to slack in economic conditions."

US Federal Reserve policy makers are set to begin a two-day meeting next week on June 17. The Federal Open Market Committee has so far downgraded its bond-buying to US$45 billion a month and is expected to announce another US$10 billion reduction next week.

Treasuries certainly took note of the accelerating economic momentum. The US sold US$28 billion of three-year securities at the highest yield in three years.

"Between the upcoming Fed meeting and supply considerations later this week, not to mention a generally bearish trend for the Treasury market overall, ambition to add exposure to front-end Treasuries has been muted," Ian Lyngen, a government-bond strategist at CRT Capital Group in Stamford, Connecticut, told Bloomberg News.

In Europe, the Stoxx 600 Index ended the day with a 0.3 per cent advance from the previous close. France's CAC 40 added 0.1 per cent, while Germany's DAX rose 0.2 per cent. The UK's FTSE 100 slipped 0.02 per cent.

Shares in Italy's Monte Paschi surged near 20 per cent on the second day of a 5-billion-euro share sale. The shares had failed to trade throughout the session until the close, Reuters reported, but they had been indicated higher.

Palladium and platinum prices rose after talks to stop a five-month strike at mines in South Africa, the world's top producer of platinum and the second-largest of palladium, ended without an agreement.