Wall St down on poor economic data (ext - FT.com)

Shares in Expedia advanced after the online travel company announced it was splitting in two, but the wider markets lost ground after disappointing economic data and hawkish comments from a Federal Reserve official, leaving the S&P 500 index lower over the week.

The S&P 500 was down 0.4 per cent at 1,328.11, leaving the index down 0.3 per cent over the week. Sentiment was subdued by economic data showing that the inventories of US wholesalers rose in February but their sales fell, a sign of uncertainty in the economic recovery.

The markets were also unsettled by comments from Richard Fisher, the president of the Dallas Federal Reserve, who said that the central bank was near the “tipping point” where it should start to focus more on combating inflation than stimulating employment.

Not helping sentiment was the growing threat of a government shutdown as US lawmakers struggled to agree on a 2012 budget before midnight.

Historical evidence suggests that the market impact of a shutdown would not be devastating. In the five-day period in November 1995 that the government was shut down, the S&P 500 rose 1.3 per cent. During the subsequent 21-day shutdown later on that year the index added 0.1 per cent.

Still, as the shutdown loomed the Dow Jones Industrial Average was down 0.2 per cent o 12,379.90 while the Nasdaq Composite was 0.6 per cent lower at 2,780.41. The Dow was flat over the week and the Nasdaq fell 0.3 per cent.

“The markets are just passing the time at the moment and will need months of good employment news before they get their next leg up. This will likely happen in the summer and take the S&P 500 up to 1,450,” said Linda Duessel, senior portfolio manager at Federated Investors. This suggests the markets will put on another 8.7 per cent before the end of the year, adding to the 5.6 per cent already put on.