NEW YORK/LONDON (Reuters) - Bleak data from the United States and Europe suggested that leading economies may not yet even be near a recovery from a global recession.
In the United States, sales of previously-owned homes rose at a lower-than-expected 2.4 percent pace in May, according to the National Association of Realtors. A separate study by the Federal Reserve Bank of Richmond said the outlook of manufacturers in the U.S. Mid-Atlantic states had cooled.
“The economy is generally improving, but maybe not according to the trajectory that the stock and commodity markets predicted,” said Andrew Brenner, senior vice president of MF Global in New York.
Meanwhile, Boeing Co said it would again delay the first test flight of its 787 Dreamliner because of a structural problem in the aircraft. The world’s second-largest maker of planes gave no new date for the flight, which is already two years behind schedule.
And in Europe, euro zone purchasing managers data released Tuesday suggest a recovery has stalled, though a manufacturing index improved as companies pared inventories.
U.S. President Barack Obama in a news conference said Federal Reserve Chairman Ben Bernanke has “performed very well” in handling the crisis, and that the U.S. central bank has the most technical expertise to monitor systemic risk.
Obama also called on the House of Representatives to pass a comprehensive climate change bill.
In afternoon trading, the Dow Jones industrial average was up 0.1 percent and the Standard & Poor’s 500 was up 0.4 percent. Boeing, a Dow component, fell 7.5 percent.
European stocks posted their lowest close in six weeks as worries about recovery prospects hurt bank stocks. The FTSEurofirst 300 dipped 0.4 percent.
U.S. Treasury prices rose, as the government found strong investor demand in an auction of $40 billion of two-year notes. The U.S. dollar fell broadly amid speculation on the outcome of the Fed meeting.
Economies are struggling as credit conditions remain tight for many borrowers, companies remain reluctant to spend and job losses mount.
Investors are focusing on whether the Fed on Wednesday will conclude a two-day meeting by expanding a $300 billion program of Treasury purchases, and perhaps signal how it might curtail its easy-money policy as the economy recovers.
Corporate America does not expect that to happen soon.
A Business Roundtable survey showed that corporate chief executives expect U.S. gross domestic product to fall 2.1 percent in 2009, and half of respondents plan to cut capital spending and jobs over the next six months. The economic outlook was the third worst in the survey’s six-year history.
“The signs appear less negative than they were last quarter, but no one is ready to suggest they are going to begin hiring to start growth,” said Ivan Seidenberg, chief executive of Verizon Communications Inc and chairman of the Business Roundtable.
In the euro zone, surveys hinted that the worst of the recession has passed, but that a recovery may take time.
Consumer spending in France fell by a larger amount than expected in May. In Germany, a purchasing managers’ index showed the rate of contraction in the private sector of Europe’s largest economy accelerated in June.
A vice governor of the People’s Bank of China earlier said he hoped the country would be among the first economies to recover from the crisis.
But he cautioned that the pick-up was still not firmly anchored and expressed particular concern about a “grim” international environment for China’s exporters.
U.S. Trade Representative Ron Kirk launched a World Trade Organization case against China, after failing to persuade the country to reduce export tariffs and raise quotas on materials such as tin, tungsten, yellow phosphorous and zinc. The European Union also said it would join the action.
Reporting by Reuters bureaus around the world; Editing by John Stonestreet, Theodore d'Afflisio, Gary Crosse