By Sinead Carew
NEW YORK/LONDON (Reuters) – A global stock index was lower on Thursday, while bond yields fell by the dollar after U.S. economic data came in weaker than expected.
The US economy grew slower than expected in the first quarter following downward revisions to consumer spending, according to a Commerce Department report that showed gross domestic product (GDP) grew 1.3% annually, versus estimates of 1. 6% and the 3.4%. pace in the fourth quarter.
It lost ground after the data after rising to a two-week high the day before, while Thursday’s decline in US Treasury yields followed two straight days of gains driven by weak Treasury auctions.
“The decline in rates reflects the reality that the economy is slowing,” said Jamie Cox, managing partner of Harris Financial Group. “The market is trying to put government bond repayments first, but then reality starts to hit the data.”
Cox also pointed to an earnings report from Salesforce (NYSE:) Inc that saw its stock down more than 20%, weighing heavily on the technology sector, which was the biggest drag on the .
On Wall Street at 10:51 a.m. (1451 GMT), the index fell 386.44 points, or 1.01%, to 38,055.10, the S&P 500 fell 25.26 points, or 0.48%, to are trading at 5,241.69, and the S&P 500 fell 111.82 points, or 0.65%, to 16,810.46.
The MSCI index for shares around the world fell 2.21 points, or 0.28%, to 781.95.
In Europe, the index rose 0.56% after a sharp decline on Wednesday when data showed German inflation rose slightly more than forecast in May. In Europe, investors await an important inflation reading for the eurozone on Friday.
And investors have also been eagerly awaiting the week’s biggest event: Friday’s April report on the U.S. Core Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve’s preferred inflation measure.
Yields on government bonds fell after the data, keeping expectations that the Fed would cut rates this year on track.
The yield on US 10-year benchmark bonds fell 6.2 basis points to 4.562%, while the yield, which is usually in line with interest rate expectations, fell 5.2 basis points to 4.9331%.
A closely watched part of the U.S. Treasury yield curve, which measures the difference between two- and 2-year yields and is seen as an indicator of economic expectations, was negative 37.3 basis points.
In currencies, the , which measures the dollar against a basket of currencies including the yen and euro, fell 0.45% to 104.66, while the euro rose 0.38% to $1.0841. Against the Japanese yen, the dollar weakened 0.65% to 156.58.
In the energy sector, oil prices were lower after the GDP data and before the crude oil stack data.
lost 0.63% to $78.7 per barrel and fell to $82.86 per barrel, down 0.89% on the day.
rose 0.26% to $2,344.74 an ounce as dollar and bond yields retreated. [GOL/]
