Dawn Chorus: Wall Street shrugs off weak economic data with late rebound

Wall Street staged a comeback on Wednesday, breaking a four-day losing streak, as gains in the health care and consumer sectors outweighed weak data on durable goods orders and new-home sales.

At the close, the Dow Jones industrial average was up 20 points or 0.2%, to 10,060. The broader Standard & Poor’s 500-stock index was three points, or 0.33%, higher, at 1,055, and the technology heavy Nasdaq rose 18 points or 0.84%, to 2,141.

However, earlier in the day equities plunged after orders for durable goods fell short of economists’ estimates, increasing 0.3% last month compared with the average forecast of a 3% rise. Meanwhile, new-home sales unexpectedly declined 12.4% to an annualised figure of 276,000 in July compared with economists’ estimates of 330,000.

In the afternoon, stocks rebounded mainly due to technical factors. The upturn was led by health care stocks, which rose 1% with Coventry Health adding 4.5% and United Health advancing 3%. Homebuilders rose after Toll Brothers beat expectations and swung into profit for the first time in three years. Its shares rose 5.8%.

European shares retreated after the dismal US economic data added to mounting concern about the strength of the world’s largest economy. The FTSEurofirst 300 index closed 0.8% lower at 1,011 points. Across Europe, the FTSE 100 index was down 0.9%, Germany's DAX fell 0.6% and France's CAC 40 was 1.2% lower.

In Asia, investors suffered another day of big losses as weak US home sales figures painted a gloomy picture about the global recovery. The FTSE Asia-Pacific index slumped 1.4% to 223.

The Nikkei 225 Average, after falling below the 9,000 level on Tuesday, tumbled a further 1.7% to 8,845 in spite of the yen retreating from 15-year highs as rhetoric from Japanese leaders failed to present firm policy moves. The broader Topix lost 1.3% to 807.

The Shanghai Composite index fell 2% to 2,596, while the BSE Sensex in Mumbai lost 0.7% to 18,180. Hong Kong’s Hang Seng lost 0.3%, with Australia’s S&P/ASX 200 index declining 1.4%.