Wall St snaps three-day winning streak

The ASX is set to follow the US into the red after a falling consumer staples sector weighed on major indices.

Investors continue to mull the US Federal Reserve’s next interest rate move. Picture: AP Photo/Seth Wenig.

The Dow Jones Industrial Average and the S&P 500 slipped overnight (AEST), as declines in shares of grocery chains dragged down the consumer-staples sector.

A day of slight moves ended three consecutive sessions of gains for the blue-chip index, while the Nasdaq Composite Index extended a three-session rally to close at a fresh high.

In Europe, stocks rose ahead of a meeting by European Central Bank chiefs on hopes of fresh stimulus measures.

The Australian share market is set to take Wall St's downbeat lead, with ASX futures down 23 points at 6.30am (AEST).

Some traders and analysts said they were expecting limited market action ahead of central bank policy meetings that begin with the European Central Bank Thursday. Recent tepid economic data on manufacturing, services and employment has investors betting the Federal Reserve is unlikely to nudge up interest rates in September.

“In order for the market to move to discernible new highs we need to see growth,” said Eric Wiegand, senior portfolio manager at US Bank’s Private Client Reserve.

The Dow Jones Industrial Average fell 12 points, or less than 0.1 per cent, to 18526. The S&P 500 fell 0.3 points, or less than 0.1 per cent, to 2186 and the Nasdaq Composite climbed 8 points, or 0.15 per cent, to 5284.

Consumer staples in the S&P 500 fell 0.9 per cent. Whole Foods Market lost 5.3 per cent and Kroger slipped 4.1 per cent after Sprouts Farmers Market cut earnings expectations, raising concerns about the impact of falling food prices on the chains’ earnings. Sprouts shares fell 14 per cent.

Energy shares in the S&P 500 rose 0.3 per cent, led by a 6.7 per cent advance from Apache, which said it has discovered a new oil field in west Texas.

Shares of Chipotle Mexican Grill gained 5.9 per cent after activist investor William Ackman’s Pershing Square Capital Management disclosed a 9.9 per cent stake in the burrito chain Tuesday, making it the second-biggest holder of Chipotle stock.

Some investors said they had low expectations for action from the ECB’s policy meeting, but were watching for a new raft of economic forecasts to provide clues on how much stimulus policy makers are likely to deliver in the future.

“There’s every indication they should ease further, but no indication they will at this point,” said Megan Greene, chief economist at Manulife Asset Management.

Some analysts believe policy makers could address concerns that the ECB’s bond-buying program is set to run out of assets to buy because of the central bank’s self-imposed rules. This could include dropping some of the rules or announcing an extension of the program beyond its current end-date of March 2017, which would give further reason for investors to keep buying sovereign bonds.

The yield on the benchmark 10-year US Treasury note fell to 1.539 per cent Wednesday from 1.544 per cent Tuesday. Bond yields and prices move in opposite directions.

The Stoxx Europe 600 index rose 0.3 per cent. Oil and gas companies were among the biggest gainers, boosted by rising crude prices. US oil rose 1.5 per cent to $US45.50 a barrel.

Asian stocks closed weaker, led by a 0.4 per cent fall in the Nikkei Stock Average as the dollar lost 0.2 per cent against the yen. A stronger currency is a hurdle for Japan’s export-dependent multinationals.

Sonja Laud, fund manager at Baring Asset Management, said allocations are set to keep flowing out of advanced countries.

“[Emerging-market] local bonds and in some cases equities is definitely something we’ve been moving into. Another area is high yield,” she said.

The MSCI Emerging Markets equity index rose 2.6 per cent in dollar terms Tuesday, the biggest jump since March.

Dow Jones