US: Wall St opens lower

US stocks rose, following their biggest gains since 2011, amid a relief rally throughout global markets and as data showed the economy grew more than previously estimated. 

PHOTO: REUTERS

AUG 28, 201510:19 PM

[WASHINGTON] Wall Street opened lower on Friday, suggesting investors were wary of taking big positions into the weekend after days of tumultuous trading that featured both the market's worst day in four years and biggest two-day gain since the financial crisis.

At 9:36 a.m. ET (1336 GMT) the Dow Jones industrial average was down 68.35 points, or 0.41 per cent, at 16,586.42, the S&P 500 was down 4.23 points, or 0.21 per cent, at 1,983.43 and the Nasdaq composite was down 1.48 points, or 0.03 percent, at 4,811.22.

Even so, the three major US indexes looked set to end the week higher after a brutal selloff early in the week sparked by worries about the health of the Chinese economy. "A lot of investors are looking for markets to calm down and are rebalancing their portfolios before going into the weekend,"said Jeff Carbone, co-founder and managing partner of Cornerstone Financial Partners.

Investors are taking a wait-and-see approach before making big decisions, he said.

The recent market turmoil has led to strategists cutting their end-of-year forecasts for indexes. Data for Aug 20-26 showed a record US$28 billion in outflows from equity funds.

Chinese stocks jumped more than 4 per cent for the second day as authorities announced that pension funds managed by China's local governments will start investing 2 trillion yuan (US$313 billion) as soon as possible in stocks and other assets.

Nine of the 10 major sectors were lower with the financial index's 0.75 per cent fall leading the decliners.

Data released on Friday showed US consumer spending picked up a bit in July as households bought more automobiles, offering further evidence of strength in the economy.

Global stock market volatility has raised doubts over when the US Federal Reserve will raise rates, particularly after New York Fed chairman William Dudley said on Wednesday the case for a September hike now appeared less compelling.

Despite the stronger-than-expected data released earlier this week, traders gave a one-in-four chance that the Fed would increase interest rates in September.

The Fed has said it will raise interest rates only when it sees a sustained recovery in the economy. While the labor market has continued to gain strength, inflation remains below the Fed's 2 percent target. "We don't think the Fed will raise rates this year. While the data has been improving, it doesn't show an over-heated economy, inflation remains low and we need to see the effect of low energy prices," Mr Carbone said.

REUTERS