Wall St mixed as IMF cuts global growth outlook

Trader Michael Milano works on the floor of the New York Stock Exchange. File photo / AP

Wall Street was mixed overnight, as shares of DuPont rallied, while biotech stocks dropped, and the International Monetary Fund downgraded its global growth forecasts.

In New York trading at about 2.15pm, the Dow Jones industrial average added 0.25 per cent. The Standard & Poor's 500 Index fell 0.5 per cent, and the Nasdaq Composite Index dropped 0.9 per cent.

The Dow moved higher as gains in shares of DuPont and those of Chevron, last up 8.8 per cent and 3.2 per cent respectively, outweighed slides in shares of UnitedHealth and those of Merck, down 3.5 per cent and 2.7 per cent respectively.

DuPont Chair and CEO Ellen Kullman said she will retire from both positions on October 16. Edward Breen, member of the DuPont board of directors, will assume the role of Interim Chair and CEO, the company said.

Shares of Illumina sank 12 per cent after the gene-sequencing company forecast fourth-quarter sales that fell short of analysts' estimates.

Investors have reassessed the odds of a US Federal Reserve interest rate increase this year, betting policy makers will likely not move until 2016.

"Investors are tired of betting that the Fed will do anything this year," Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany, told Bloomberg.

"A lot of people have to reduce their protection, which will feed into a rally. From a value point, we are still on an inexpensive level."

A Commerce Department report showed the US trade deficit climbed by 15.6 per cent to US$48.3 billion in August, the largest gap since March, as weakening global growth curbed exports.

"Trade will remain a drag on the real economy until well into next year," Steve Murphy, an economist at Capital Economics, told Reuters.

Indeed, the International Monetary Fund downgraded its forecast for the global economy from its previous estimate in July. It now predicts worldwide growth of 3.1 per cent for 2015, and of 3.6 per cent in 2016. It also lowered its expectations for US growth, now 2.0 per cent this year, and 2.2 per cent next year.

"Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but nearly across the board," Maurice Obstfeld, IMF economic counsellor and director of the research department, said in a statement. "Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago."

The IMF kept its 2015 forecast for the euro-zone economy at an expansion rate of 1.5 per cent, though cut its 2016 estimate to 1.6 per cent.

In Europe, the Stoxx 600 Index finished the session with a 0.6 per cent increase from the previous close. The UK's FTSE 100 Index rose 0.4 per cent, Germany's DAX Index climbed 0.9 per cent, while France's CAC 400 Index rallied 1 per cent.