Stocks Opened Sharply Lower on Economic Data

U.S. stocks opened sharply lower on Wednesday, erasing much of the prior day’s gains, after economic data dampened sentiment. The Dow Jones Industrial Average lately fell 74.29 points to 12,001.82. The Standard & Poor’s 500 Index dropped 7.35 points to 1,280.52. The Nasdaq Composite Index declined 14.21 points to 2,664.51.

Manufacturing activity deteriorated sharply in the New York region in June. The New York Federal Reserve Bank said on Monday its “Empire State” manufacturing activity index fell in June to -7.79 from 11.88 in May. This is the first time the index has been below zero since last November.

Consumer Price Index rose 0.2 percent in May, the Labor Department said. That’s down from April’s 0.4 percent increase. Food costs rose 0.4 percent. But energy costs fell 1 percent. So-called “core” prices, which exclude volatile food and energy, rose 0.3 percent, the most in nearly three years.

Applications for home mortgages saw their biggest jump in three months last week. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, surged 13.0 percent in the week ended June 10, the biggest percent gain since March. The MBA’s seasonally adjusted index of refinancing applications spiked up 16.5 percent, while the gauge of loan requests for home purchases gained 4.5 percent.

The Treasury Department said Wednesday that China increased its holdings by $7.6 billion to $1.15 trillion. Total  foreign holdings of Treasury securities rose 0.2 percent to $4.49 trillion.

Republicans have quietly maneuvered to prevent a House spending bill from chipping away at federal farm subsidies, instead forging ahead with much larger cuts to domestic and international food aid. The GOP move will probably prevent up to $167 million in cuts in direct payments to farmers, including some of the nation’s wealthiest.

Euro zone ministers failed on Tuesday to reach an agreement on how private holders of Greek debt should share the costs of a new bailout. The lack of a deal pushed bond yields of Greece, Ireland and Portugal to their highest levels since the introduction of the euro in 1999, and Moody’s on Wednesday placed France’s top three banks on review for a possible downgrade, citing the banks’ exposure to Greek debt.

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