Newly-tweaked Dow index opens week lower

NEW YORK/PARIS — Wall Street stocks paused near record levels on Monday ahead of key economic data later in the week, with a newly-tweaked Dow index edging lower.

The final session of a heady August opened on a lackluster note as markets await employment data and updates on the manufacturing and services sectors in the coming days.

About 15 minutes into trading, the Dow Jones Industrial Average was down 0.4 per cent to 28,539.83.

The broad-based S&P 500 was essentially flat at 3,507.31, while the tech-rich Nasdaq Composite Index added 0.3 per cent at 11,729.11.

In Europe, stock markets eased lower in quiet trade on Monday after the US Federal Reserve (Fed) signalled it would keep interest rates at unprecedented lows for as long as it takes to get through the coronavirus crisis.

London was closed for a public holiday, leaving Paris and Frankfurt to set the tone with very slight drops in afternoon exchanges.

“Cheap central bank money is going to continue to support the stock markets,” said independent analyst Timo Emden in Frankfurt.

The Fed’s pledge of trillions of dollars in support has been key to stock market gains since the massive virus-induced sell-off in March.

US Fed chief Jerome Powell on Thursday went even further, saying the US central bank would focus on growth and jobs from now on rather than on inflation, meaning that interest rates and controlling inflation would be a secondary consideration.

Stephen Innes at AxiCorp noted that during the financial crisis, the US began cutting interest rates in mid-2007 and did not lift them until more than eight years later.

He felt it might take just as long to see them hiked again.

Meanwhile, Asian shares were mostly lower, with Hong Kong down one per cent as Shanghai dipped 0.2 per cent, both having jumped more than 1 per cent earlier.

Tokyo rose more than 1 per cent, shrugging off concerns over who would succeed Prime Minister Shinzo Abe after news that US investment legend Warren Buffett had bought huge holdings in top Japanese companies.

Positive service sector data in China helped offset slower manufacturing figures and offered reassurance the world’s number two economy is emerging strongly from the coronavirus crisis.