Stocks Fall on Manufacturing Data as Yen Climbs

Photographer: Tomohiro Ohsumi/Bloomberg

Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo. Close

Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo.

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Photographer: Tomohiro Ohsumi/Bloomberg

Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo.

U.S. stocks fell, sending the Standard & Poor’s 500 Index (SPX) lower after a record high, as data showed American manufacturing slid in March. The yen rose to a three-week high, while commodities tumbled after economic reports from Japan, China and South Korea missed estimates.

The Standard & Poor’s 500 Index dropped 0.5 percent to 1,562.17 at 4 p.m. in New York. The yen appreciated 0.9 percent against the dollar after declining for a sixth month in March, the longest losing streak in 12 years. The S&P GSCI Index of 24 commodities fell 0.3 percent, with silver and corn both sliding into a bear market. Crude oil snapped a five-day rally while gold rose. Most European markets were closed for a holiday.

U.S. manufacturing expanded less than forecast in March as factories slowed production and orders waned. The Bank of Japan’s Tankan index showed pessimism among large manufacturers and data on South Korean exports and China factory output trailed forecasts. Shares retreated today after global stocks beat all other investments for a second quarter in the first three months of the year, the first back-to-back outperformance since 2009.

“We’ve had a whole year of returns in three months,” Tim Hartzell, who helps manage about $425 million as chief investment officer at Sequent Asset Management in Houston, said in a phone interview. “U.S. equities have gained at the expense of other markets, but we may slow down as we go into the summer season.”

Manufacturing Data

The Institute for Supply Management’s factory index fell to 51.3 in March from 54.2 a month earlier, the Tempe, Arizona- based group said today. Economists projected a reading of 54 for gauge, according to the median forecast in a Bloomberg survey. Figures higher than 50 signal expansion. to need good earnings reports later this month.’’

The S&P 500 rose 0.4 percent on March 28 to reach its highest closing level. It remains below the all-time intraday high of 1,576.09. The gauge rallied 10 percent in the first quarter, extending a recovery that has added more than $10 trillion of value to the world’s largest stock market. The Dow Jones Industrial Average first passed its 2007 record on March 5.

Joy Global Inc., U.S. Steel Corp. and Freeport-McMoRan Copper & Gold Inc. tumbled more than 2.2 percent as industrial and raw-material shares had the biggest declines among 10 S&P 500 groups. General Mills Inc. fell 1.3 percent after Morgan Stanley downgraded the shares.

Treasuries traded close to a four-week low after the manufacturing data. The 10-year yield fell one basis point to 1.84 percent.

Yen Strengthens

The yen strengthened against 15 of its 16 major peers, advancing 0.7 percent versus the euro. South Korea’s won slipped 0.2 percent against the dollar. The euro gained 0.2 percent to $1.2849, after depreciating 1.8 percent last month.

Unemployment in the euro area probably climbed to an all- time high of 12 percent in February, economists estimated before a report tomorrow. European Central Bank officials meet this week to set interest rates.

Japan’s Topix Index (TPX) slid 3.3 percent, the most since March 2011, and the Nikkei 225 Stock Average declined 2.1 percent. The Tankan rose to minus 8 in March from minus 12 in December, the Bank of Japan (8301) said today. The median estimate in a Bloomberg News survey was minus 7.

“We need to see the economy showing signs of improvement and inflation numbers picking up in Japan,” Vasu Menon, head of content and research at OCBC Bank Ltd. in Singapore, said on Bloomberg Television’s On the Move with Rishaad Salamat. “China is recovering, but the recovery is going to be a modest one.”

Metals Tumble

Copper futures declined to the lowest in almost eight months after an industry report on manufacturing signaled demand may ease in China, the world’s biggest user of industrial metals. Futures for May delivery slid 0.8 percent on the Comex in New York. The London Metal Exchange is closed today. Silver fell 1.3 percent, extending a decline from Oct. 4 to 20 percent, meeting the definition used by some investors to identify a bear market. Gold rose for the second time in three sessions.

Oil slid for the first time in six days, dropping 16 cents to $97.07 a barrel, on speculation that the closure of an Exxon Mobil Corp. pipeline will increase U.S. inventories.

The Purchasing Managers’ Index was 50.9 in March, Chinese government data showed today. The median estimate of analysts in a Bloomberg News survey was 51.2.

Chinese Data

“The Chinese data came in below expectations, and the realization may be starting to set in that demand isn’t picking up as much as people thought it would,” Harry Denny, a broker at Hoboken, New Jersey-based PVM Futures Inc., said in a telephone interview. “The expectations for China are high, and they’re just not there. Stocks of copper are also very high.”

Corn entered a bear market, tumbling 7.6 percent, the biggest decline in 24 years. The price is down 23 percent since last year’s closing high. Bigger-than-forecast stockpiles and higher planting signal ample supplies in the U.S., the world’s top grower and exporter. Wheat fell to a nine-month low today, and soybeans dropped.

The MSCI Emerging Markets Index (MXEF) slid 0.3 percent, extending last quarter’s 1.9 percent decline. South Korea’s Kospi index slipped 0.4 percent. The Shanghai Composite Index fell 0.1 percent.

To contact the reporters on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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