U.S. stocks pared losses after data showed faster-than-estimated growth in factory orders. European shares slid after euro-area data showed slower inflation and joblessness near a record high, while Treasuries extended a selloff into a fourth day.
The Standard & Poor’s 500 Index (CME:SPM14) was little changed as of 10:10 a.m. in New York after earlier falling as much as 0.3%. The Stoxx Europe 600 Index dropped 0.5%. The euro (CME:E6M14) strengthened and the yield on 10-year Treasury notes increased three basis points to 2.56%. Copper fell 1%. The MSCI Emerging Markets Index added 0.5%, climbing for a second day.
U.S. factory orders rose 0.7% in April, exceeding forecasts for a 0.5% increase. Data later this week will probably show the American unemployment rate last month remained near its lowest level since September 2008. Slower inflation in Europe is raising pressure on the European Central Bank to deploy measures as soon as this week to kindle prices and drive growth.
“All eyes are on the ECB meeting on Thursday,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Equities are mostly down as investors do not think that the ECB will do enough.”
The Stoxx 600 slipped after closing at its highest level since January 2008 yesterday. All 19 industries in the stocks gauge fell, led by raw-material producers and media companies.
With ECB President Mario Draghi warning about the risk of a negative price spiral, the Governing Council is considering measures from negative interest rates to conditional liquidity for banks. The central bank has prepared investors for the prospect of stimulus when it announces its rate decisions on June 5. “We are ready to act,” ECB Vice President Vitor Constancio said on May 30.
Anemic growth in the euro zone has added to the case for ECB stimulus, as policy makers continue to struggle with the legacy of the debt crisis. The jobless rate fell to 11.7% in April from 11.8% a month earlier, according to Eurostat.