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Stocks pointed toward a lower opening Tuesday as Wall Street cautiously awaited data on the nation's service sector.
Investors will be examining the Institute for Supply Management's May index on non-manufacturing industries, scheduled to be released at 10 a.m. EDT. According to the median estimate of economists surveyed by Thomson Financial, the market expects the index to hold steady at 56.0, the same reading as in April.
A reading above 50 indicates expansion in the service sector, a diverse group of industries that represents about 80 percent of U.S. economic activity and includes retailing, banking, construction and agriculture. Investors are hoping the report will indicate that the service sector is still expanding. Growth that is too robust could stoke worries about the Federal Reserve raising interest rates later in the year, however. On Friday, the ISM's manufacturing index came in above expectations.
Meanwhile, Fed Chairman Ben Bernanke's speech by satellite to the International Monetary Fund in South Africa Tuesday gave investors little incentive to buy. He said in prepared comments that the economy will recover from its recent feeble performance, despite a housing slump that "appears likely to remain a drag on economic growth for somewhat longer than previously expected."
Bernanke's forecast of rebounding growth, as well as a reiteration that inflation remains "somewhat elevated," made it appear unlikely the Fed will lower rates anytime soon.
Source: AP

Labels: Ben Bernanke, Economy, Stocks, Wall Street