U.S. data weighs on global stocks

By Manuela Badawy

NEW YORK (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) ended higher on Monday supported by strong earnings but gains were limited by a drop in U.S. housing data showing cracks in the recovery of the world’s largest economy.

Demand for the dollar fell after weak homebuilding data reminded investors of the delicate state of the economic recovery. Gold fell to a two-month low amid a sharper appetite for riskier assets, while oil prices trimmed earlier gains.

Solid earnings from Halliburton and news of Boeing orders pushed U.S. stocks (Read more about the stock market today. ) to positive territory at the end of business. But a decline in homebuilder sentiment to its lowest level in more than a year after a popular homebuyer tax credit expired exacerbated the negative tone from Friday’s worst one-day drop since late June for major U.S. stock indexes.

“There’s a lot of indecision about the overall economy’s direction and moves like Friday’s only reinforce the negative view of the second half of the year, as opposed to making people feel these are buying opportunities,” said Michael James, senior trader at Wedbush Morgan in Los Angeles.

Traders were reluctant to take fresh positions ahead of Fed Chairman Ben Bernanke’s comments on the economy on Wednesday. He could temper fears of a double-dip recession when he testifies at his semi-annual appearance before Congress.

“Seeing these numbers go down fits the notion that housing will be a drag into the third quarter,” said Jonathan Basile, economist at Credit Suisse in New York. “The downside surprise today means a downside surprise in housing starts tomorrow.”

U.S. housing starts data is to be released on Tuesday at 8:30 a.m. EDT.

The Dow Jones industrial average (.DJI: ) ended up 56.53 points, or 0.56 percent, at 10,154.43. The Standard & Poor’s 500 Index (.SPX: ) rose 6.37 points, or 0.60 percent, at 1,071.25. The Nasdaq Composite Index (.IXIC: ) gained 19.18 points, or 0.88 percent, at 2,198.23.

Halliburton (HAL.N: ), which worked on the leaking well in the Gulf of Mexico, reported profit surged 83 percent on strong U.S. onshore drilling.

Boeing Co (BA.N: ) was one of the top boosts to the Dow, rising 1.3 percent to $62.65, after a top executive said the planemaker will announce a significant number of new orders in the coming days.

World stocks as measured by MSCI edged down 0.1 percent, while its emerging market counterpart (.MSCIEF: ) lost 0.4 percent.

In Europe, the FTSEurofirst 300 index (.FTEU3: ) closed negative after the U.S. homebuilder sentiment, falling 0.6 percent.

Optimism over a pickup in M&A activity helped provide some support to the index. International Power surged 10.6 percent after confirming it has revived talks with France’s GDF Suez (GSZ.PA: ), which rose 0.8 percent.

Data at the end of last week showed consumer sentiment in the world’s biggest economy dropped to a near one-year low in July and consumer prices fell for a third month in June, highlighting a sluggish U.S. recovery.

EURO CAPPED

The euro was up 0.13 percent at $1.2948, trading near a recent two-month high against the dollar. It rebounded from earlier lows hit after Moody’s cut Ireland’s debt rating and talks between Hungary and international lenders broke down.

The dollar has been pressured in recent weeks as disappointing U.S. economic news quashed expectations of an interest-rate hike by the Federal Reserve, diminishing the currency’s yield appeal.

“The euro is now simply trading on U.S. economic weakness,” said Joseph Trevisani, chief market analyst at FX Solutions in Saddle River, New Jersey.

Semi-official euro demand was helping push the rate back above $1.2900. A large buy order from the Middle East lifted euro/dollar to a session high of $1.2991.

In energy and commodity prices, crude oil rose 0.5 percent to $76.44 per barrel, while spot gold fell more than 1 percent to a two-month low at $1,177.15 an ounce.

“Liquidation of long positions is weighing,” said BNP Paribas analyst Anne-Laure Tremblay. “The liquidation is taking gold closer to closely watched technical levels, and this has potentially initiated further selling.”

U.S. Treasury debt prices slipped, but volume was scant.

The benchmark 10-year U.S. Treasury note was down 11/32, with the yield at 2.9644 percent. The 2-year U.S. Treasury note was down 1/32, with the yield at 0.5926 percent. The 30-year U.S. Treasury bond was down 27/32, with the yield at 3.9849 percent.

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(Additional reporting by Rodrigo Campos, Wanfeng Zhou and Richard Leong in New York, and Jan Harvey in London; Editing by Andrew Hay)

U.S. data weighs on global stocks