(As of 7:30 am PST)
Markets
are giving back some of Friday’s gains as slumping oil prices and disappointing
data out of China this weekend weighed down stocks. Oil is down this
morning, with crude oil falling nearly 5% to just under $32 per barrel as
concerns were raised over whether or not OPEC and non-OPEC members would follow
through with projected production cuts. Adding to the downside pressure was
news out of China this weekend that showed manufacturing activity contracting
for the sixth consecutive month. The data sent the Shanghai index tumbling 1.8%
Monday, with most Asian and European indexes following suit. Economic data on
the home front is also uninspiring. The PCE index, one of the key inflation
measures viewed by the Fed, fell 0.1% in December suggesting that inflationary
pressure remains low. This should likely play into the Fed’s decision to delay
raising interest rates at its March meeting. Consumer spending was flat in December
while personal income rose slightly. Construction spending inched higher in December,
while a key report on US manufacturing, the ISM index, showed the sector
contracted for the fourth straight month. Later this afternoon, Federal Reserve
Vice Chairman, Stanley Fischer is scheduled to speak at the Council on Foreign
Relations. The markets will be paying close attention to any commentary Fischer
gives on the Fed’s policy paths for the rest of the year.
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