U.S. stocks and exchange traded funds (ETFs) fell in morning trading as worries about how consumers are feeling pervade the markets.
The Reuters/University of Michigan index of consumer sentiment fell sharply in the first part of the month indicating that consumers may put the brakes on spending, says Sara Lepro for the Associated Press. The index fell from 66.0 to 63.2, which was well below analysts’ expectations of 68.5. The Labor Department reported that consumer prices remained steady with no change in July, while core inflation rose by 0.1% and food costs dropped by 0.3%.
On a positive note, the recent rally in the equities market has enabled stocks and ETFs around the globe to rally to a 10-month high. Industrial production from American factories, mines and utilities rose in July for the first time in 9 months. This rise in production has primarily been fueled by the extremely popular “Cash for Clunkers” program. Despite the news, the SPDR S&P Metals & Mining (XME) dropped 2.9% in morning trading.
Crude oil is moving close to $71/barrel this morning. The gains in crude were driven by hopes that the U.S. economy will recover later in the year, as well as the economic growth seen in the second quarter by Germany and France. Despite the news, the United States Oil Fund (USO) dropped 3.4% in morning trading.
Overall, all three major U.S. indexes were down in morning trading, with the Dow Jones Industrial Average shedding 1.5%, the S&P 500 declining by 1.5% and the Nadaq dropping 1.7%.
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Kevin Grewal contributed to this article.