NEW YORK: Flagging US consumer sentiment and a Chevron profit warning fed jitters about an economic recovery on Friday, knocking down global stocks and oil prices while boosting the safe-haven appeal of the dollar and government debt.
US crude prices slid below $59 a barrel in their biggest weekly decline since late January, while both the Dow and S&P 500, along with European shares, notched a fourth straight week of losses.
Crude's 10 percent slide this week has underscored worries that the recovery will be weaker than originally hoped and that second-quarter corporate results, which are just starting to be released, are unlikely to surprise much on the upside.
US consumers' moods soured in early July on persistent worries about jobs, the Reuters/University of Michigan Surveys of Consumers showed, offering little hope that consumer spending will help a sputtering economy.
"The Michigan number was a bit of a disappointment," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London.
Some economic data points have failed to meet expectations the economy will pick up this year, said Cleveland Rueckert, market analyst at Birinyi Associates in Stamford, Connecticut.
"People are starting to question whether the economic recovery is going to take place in the latter part of this year or whether it's going to come next year," Rueckert said.
The disappointing outlook late Thursday from Chevron Corp , the second-largest US oil company, set the tone for equity markets worldwide.
MSCI's all-country world index fell 0.6 percent. Chevron fell 2.7 percent, the top Dow decliner.
Few companies will raise their outlooks during this reporting season, said David Katz, chief investment officer at Matrix Asset Advisors in New York.
"There's no incentive to step up and talk up the future, especially because there's low visibility," Katz said. "Our expectation is that companies are going to do what they've been doing: beating expectations but setting a low bar and being cautious."
The Dow Jones industrial average closed down 36.65 points, or 0.45 percent, at 8,146.52 and The Standard & Poor's 500 Index <.SPX> slid 3.55 points, or 0.40 percent, at 879.13.
But the Nasdaq Composite Index rose 3.48 points, or 0.20 percent, at 1,756.03 as the tech-rich Nasdaq outperformed the wider market.
Goldman Sachs upgraded the US hardware and software sectors to "attractive" from "neutral," citing potential growth in demand from businesses.
In Europe, the FTSEurofirst 300 index of top regional shares fell 1.1 percent to close at 814.29 points, its lowest close in more than 10 weeks.
Oil fell in the sixth of the last seven trading sessions.
US crude settled down 52 cents to $59.89 a barrel, while London Brent crude fell 58 cents to settle at $60.52 a barrel.
"The mood has changed and people are losing confidence about the economic recovery," said Simon Wardell at IHS Global Insight. "We are in one of those phases where no matter what happens in other markets oil will go down."
US Treasuries rallied, pushing benchmark yields to seven-week lows, as investors jumped back into debt on relief the market digested this week's sale of $73 billion in long-dated supply without much of a hitch.
"The recession hasn't really bottomed out," said Anne Ruff, a portfolio manager with Rydex Investments in Rockville, Maryland. "The bond market should continue to rally."
New York gold futures finished lower in light trade as worries about economic growth reduced bullion's appeal as an inflation hedge. Most other commodities also fell.
The August contract settled down $3.70 at $912.50 an ounce in New York.
The benchmark 10-year US Treasury note was up 31/32 in price to yield 3.3 percent. The 2-year US Treasury note was up 2/32 in price to yield 0.89 percent.
The dollar rose against a basket of major currencies, with the US Dollar Index up 0.47 percent at 80.243. Against the yen, the dollar was down 0.58 percent.
The euro was down 0.55 percent at $1.3947.
Amid the gloomy outlook, rates on dollar, euro and sterling funds that banks lend among themselves eased again, with benchmark three-month rates hitting record lows as money markets remained flush with central bank liquidity.
"They're going to keep an ultra accommodative policy in place and supply whatever liquidity that is necessary," said Sean Maloney, rate strategist at Nomura in London.
Uncertainty over earnings and the prospect for economic recovery led Asian shares lower, with Japanese shares sliding to near seven-week lows.
Japan's Nikkei average shed just 0.04 percent, falling for an eighth straight session, while MSCI's measure of stocks elsewhere in the Asia-Pacific region edged up during the Asia session, but later fell 0.4 percent.
(Reuters)
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