Market Snapshot June 15, 2009, 4:30PM EST

Stocks Tumble on Disappointing Data

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Among Monday's economic developments, the U.S. Empire State index fell to -9.4 in June from -4.6 in May, weaker than the -8.7 reading seen a year ago and in contrast to expectations for an increase to -3.0. However, the index is far above its all time record low of -38.2 seen in March. Some weakness was seen in inventories, falling to -25.3 from -21.6. However, the employment index rose to -21.8 from -23.9, while new orders edged up to -8.2 from -9.0. Both prices paid and received were up to -5.8 from -11.4 and -12.7 from -27.3, respectively. Moreover, the 6-month ahead index improved to 47.8 from 43.8.

Overall, while the headline reading was negative, details of the report weren't as bad, according to Standard & Poor's senior economist Beth Ann Bovino.

The U.S. NAHB homebuilder survey index fell to 15 in June after having climbed to 16 in May from 8 at the beginning of the year. The single family index was unchanged at 14, but the 6-month outlook on sales dipped to 26 from 27. The index of prospective buyer traffic was flat at 13.

U.S. capital flows (TIC) data showed foreigners sold $53.2 billion in U.S. assets in April, after purchasing $25.0 billion in March (revised from $23.2 billion). Overseas accounts bought $41.9 billion in Treasury coupons, vs. $55.3 billion in March.

Three Federal Reserve officials weighed in on the ecoonomy and interest rates on Monday.

Chicago Federal Reserve Bank President Don Evans said that the economy is closer to a turning point now than two months ago. He reckoned that non-standard Fed policy should be unwound once the economy is more clearly headed for sustainable growth. Meanwhile, he is braced for more deterioration in jobs before Fed policy gains full traction, while inflation pressures won't arise without a broader credit expansion. He sees TALF helping to jump-start the ABS market, while spreads have been improving even as long yields rise.

Dallas Fed President Richard Fisher said being a "screeching hawk" is not appropriate right now, given so much slack in the economy that inflation is not currently an issue, in a Bloomberg TV interview. He doesn't see the Fed hiking in the immediate future, though it is constantly working on its exit strategy. He is not convinced that the back-up in rates is due to fears about monetizing the debt, but largely a measure of supply and demand. Fisher said the Fed's purchases of Treasuries have had an impact on the economy and private corporate spreads. Stocks and yields remain near session lows after this relatively dovish salvo from the arch-hawk.

St. Louis Fed President James Bullard said in a CNBC interview that he is cautiously optimistic for some second half growth, while the banking system is still stressed, though measures such as the Libor/OIS spread have clearly improved. He also sees deflationary risks as abating.