U.S. Stocks Fall as Commodity Producers Drop; Dollar Slips as Bonds Gain
U.S. stocks fell, breaking a three- day streak of gains for the Standard & Poor’s 500 Index, as commodity producers led declines. The dollar slipped versus the Swiss franc for a fourth straight day and Treasuries rose.
The S&P 500 dropped 0.2 percent to 1,335.25 at 4 p.m. in New York as gauges of energy and raw-material companies lost at least 0.6 percent. Oil was little changed, while copper futures plunged 2.2 percent, the most in almost seven weeks, while gold and silver touched records in London. The dollar lost 0.6 percent versus the franc, the most among 16 major peers. Ten- year Treasury yields fell four basis points to 3.36 percent.
Marathon Oil Corp. and Newmont Mining Corp. lost at least 2.3 percent to pace losses among commodity producers in the S&P 500, while Kimberly-Clark Corp. retreated 2.7 percent after the maker of Scott toilet paper and Huggies diapers cut the lower end of its 2011 profit forecast, citing higher materials costs. Investors also looked ahead to the Federal Reserve’s statement on interest rates and the economic outlook on April 27.
“Profit estimates and growth expectations are beginning to soften a little bit,” said Robert Schaeffer, a money manager at Becker Capital Management Inc. in Portland, Oregon, which oversees about $2.5 billion. “We’re in a trading-range market, and unless something unexpected happens we will probably be stuck where we are right now.”
S&P 500’s High
The S&P 500 has failed to rise above its 2011 high reached on February 18 even as it closed less than 1 percent below that peak on eight days so far in April. The Feb. 18 close of 1,343.01 was the index’s highest since June 2008. The gauge is still up 6.2 percent in 2011 amid higher-than-estimated profits and government programs to stimulate the economy.
Per-share earnings have exceeded estimates at 81 percent of the 124 companies in the S&P 500 that reported first-quarter results since April 11, according to data compiled by Bloomberg.
The Federal Open Market Committee will hold the benchmark interest rate in a range of zero to 0.25 percent on April 27, according to all 80 economists surveyed by Bloomberg. Gross domestic product rose at a 1.9 percent annual pace after increasing at a 3.1 percent rate in the previous three months, according to the median estimate of 66 economists surveyed by Bloomberg News before an April 28 Commerce Department report.
The Dollar Index slipped 0.1 percent to 74.029 after declining as much as 0.4 percent earlier. The gauge, used by IntercontinentalExchange Inc. to track the greenback versus the currencies of six major U.S. trading partners, touched 73.735 on April 21, the lowest since August 2008.
Eight of 12 homebuilders in S&P indexes gained after new- home sales in the U.S., tabulated when contracts are signed, climbed 12 percent to a 280,000 annual pace last month, according to the median estimate in a Bloomberg News survey of 64 economists. Purchases slumped 17 percent in February to a 250,000 rate, the weakest in data going back to 1963.
China’s Shanghai Composite Index led losses in Asia after China International Capital Corp. said the nation’s consumer prices may rise as much as 5.5 percent this month. Singapore’s inflation held at 5 percent in March, a government report today showed.
“It’s very clear that some Asian countries will keep raising rates more while their economies are strong enough to see more hikes,” said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “On the other hand, market players expect the U.S. this week to suggest it would keep low rates for some time, which means more yield appeal for Asia.”
Silver, which has more than doubled over the past year, rose as investors sought precious metals as a store of value and amid speculation China will buy gold and silver to diversify its foreign-exchange holdings. Silver for July delivery rose 2.4 percent to settle at $47.173 an ounce in New York and the metal for immediate delivery climbed as much as 5.4 percent to $49.79 in London. Gold for immediate delivery climbed as much as 0.8 percent to $1,518.32 an ounce.
Corn for July delivery surged 3.2 percent to $7.685 a bushel on speculation that wet, cold weather across the U.S. Midwest will further delay planting, reducing yields. Wheat for July increased 3.2 percent to $8.6125 a bushel.
Oil for June delivery slipped 1 cent to settle at $112.28 a barrel in New York.
Recent gains in commodity prices are fueling speculation policy makers in Asia will step up tightening efforts. The Malaysian ringgit gained as much as 0.5 percent to 2.9910, the strongest level since Oct. 9, 1997, on speculation the central bank will raise interest rates next month to help damp inflation.
“There’s a perception that central banks in Asia are allowing their currencies to appreciate so as to curb imported inflation,” Lee Wai Tuck, a strategist at Forecast Pte in Singapore, said in a Bloomberg Television interview. “There are some concerns that if currencies do not appreciate, inflation may go even higher” in countries including China and Singapore, he said.
The Bank of Japan may cut its forecast for real growth for fiscal 2011 to 0.8 percent from 1.6 percent as a result of the March 11 earthquake, the Nikkei newspaper reported today. The central bank will keep its benchmark interest rate at a range between zero and 0.1 percent at its next meeting, according to all of 13 economists surveyed by Bloomberg News.
About four shares declined for every three that climbed in MSCI’s Asia Pacific Index, which slipped 0.2 percent today. The Shanghai Composite dropped 1.5 percent.
Posco (005490), Acer
Posco slipped 1.9 percent in Korea after the world’s third- biggest steelmaker by output said first-quarter profit dropped 33 percent. Acer Inc. (2353) sank 3.1 percent in Taiwan after the world’s second-largest supplier of notebook computers reported the lowest quarterly profit in six years. Reliance Industries Ltd. (RIL), India’s biggest company by market value, fell 3 percent in India after posting net income that missed analyst forecasts.
Since April 11, just 42 percent of the 73 companies in the MSCI Asia Pacific that reported per-share earnings have beaten analyst predictions, compared with about 69 percent in the MSCI World Index, according to data compiled by Bloomberg.
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