U.S. stocks extended a weekly gain, while oil and gold helped lead commodities lower, amid talks on a plan for Syria to surrender chemical weapons as investors weighed prospects for the Federal Reserve to cut stimulus.
The Standard & Poor’s 500 Index (SPX) added 0.3 percent to 1,687.99, capping a weekly gain of 2 percent, and the Stoxx Europe 600 Index climbed 0.2 percent. Oil slipped 0.4 percent to $108.21 a barrel. Gold for December delivery lost 1.7 percent to $1,308.60 an ounce. The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, lost 0.1 percent after erasing early gains. The yield on 10-year Treasuries fell two basis points to 2.89 percent and German bund yields dropped two basis points to 1.98 percent.
U.S. Secretary of State John Kerry reported a “constructive” start to talks in Geneva today with Russian Foreign Minister Sergei Lavrov over Syria’s chemical weapons. U.S. retail sales rose less than projected by economists and a gauge of consumer confidence decreased more than forecast, reports showed today. The Fed will decide to cut monthly purchases of Treasuries to $35 billion from $45 billion and keep mortgage-bond buying at $40 billion at its Sept. 17-18 meeting, another Bloomberg survey showed.
“Concern over Syria seems to be abated,” Channing Smith, who helps oversee about $1.2 billion at Capital Advisors Inc. in Tulsa, Oklahoma, said in a phone interview. “The next potential market moving event will be the Fed. The view is that we’re recovering and continue to do it in a slow pace. The Fed will begin to taper but will be on a magnitude of $10 billion, which shouldn’t have an impact.”
The anticipated reduction in stimulus by the Fed that has roiled the financial markets for months will be seen as no big deal if it goes ahead next week, according to a Bloomberg Global Poll of investors. Fifty-seven percent of those surveyed say they don’t expect a sudden change in the markets because investors already anticipate tapering action by the U.S. central bank. Eight percent see a rally on such news, while just under a third are looking for declines, based on the Sept. 10 poll of 900 investors, traders and analysts who are Bloomberg subscribers.
West Texas Intermediate crude fell about 2 percent over five days,its first weekly decline in three weeks, as tensions over Syria eased.
Brent crude traded in London was little changed today and down almost 3 percent for the week, the most since June.
“A lot of the geopolitical risk in prices linked to Syria has deflated over the past week as the U.S. accepts to explore alternative diplomatic routes with the Russians to solving the Syrian crisis,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London.
Lead, wheat, corn and aluminum fell more than 1 percent to lead losses in the S&P GSCI Index of commodities, which fell 0.4 percent today and 2.2 percent this week. Wheat declined 1.8 percent and corn fell 1.6 percent after the U.S. Department of Agriculture forecast more supplies.
Data today showed U.S. retail sales increased 0.2 percent last month, the smallest in four months, and followed a revised 0.4 percent July gain that was bigger than previously estimated. The median forecast of economists surveyed by Bloomberg called for a 0.5 percent advance. Sales excluding motor vehicles rose 0.1 percent.
Consumer confidence in the U.S. declined in September to the lowest level since April, indicating household spending may take time to pick up. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment this month fell to 76.8 from August’s 82.1. Economists in a Bloomberg survey called for 82, according to the median projection.
Among stocks moving in the U.S. today, commodity, utility and consumer-staples companies led gains in all 10 of the main industry groups in the S&P 500. Intel Corp. gained 3.6 percent after Jefferies Group LLC raised its rating on the stock and Safeway Inc. climbed 6.1 percent after Credit Suisse Group AG raised its recommendation for the shares.
Twitter Inc. disclosed it had filed to go public in one of its 140-character postings yesterday, giving no other financial figures or details on when it will actually list. Twitter’s market debut will be led by Goldman Sachs Group Inc. and is likely to be the most anticipated initial public offering since Facebook Inc. listed last year.
“What Twitter management and Goldman are doing is observing that valuations are at healthy levels and that it’s a good time to attempt an IPO of this scale,” Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $364 billion, said in a phone interview.
The S&P 500 trades at 16.2 times reported earnings, above the average multiple of 15.3 over the past five years, data compiled by Bloomberg show. The benchmark index has rallied 18 percent in 2013.
The Stoxx 600 finished with the day with an advance of 0.2 percent, erasing an earlier decline of as much as 0.4 percent. TDC A/S dropped 3.1 percent as a group of private-equity firms sold a 4.17 billion kroner ($743 million) stake in Denmark’s biggest phone company. That amounted to a stake of about 11 percent, according to JPMorgan Chase & Co., which managed the sale.
Fresenius SE climbed 3.6 percent after its Helios unit agreed to buy 43 hospitals from Rhoen-Klinikum AG. The 3.07 billion-euro ($4.1 billion) acquisition will create Europe’s largest chain of private clinics. Rhoen-Klinikum rallied 11 percent. Kabel Deutschland Holding AG jumped 6.3 percent after Vodafone Group Plc said that investors representing at least 75 percent of the German company’s shares backed its 7.7 billion-euro bid.
The MSCI Emerging Markets Index fell for a second day, losing 0.4 percent. The gauge has gained 3.2 percent this week, the biggest weekly advance since June. The Shanghai Composite Index lost 0.9 percent today, and the Hang Seng China Enterprises Index of mainland companies traded in Hong Kong slid 1.4 percent.
Ten-year Treasury yields fell five basis points this week after surging 15 points and reaching a two-year high of 2.99 percent last week. Bonds fell earlier today after Nikkei reported that former U.S. Treasury Secretary Lawrence Summers will be named as Fed chairman. Summers would tighten Fed policy more than Janet Yellen, his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll. President Obama hasn’t made a decision on whom to nominate as Fed chairman, White House spokesman Amy Brundage said on Twitter.
“We are in line with the market expectations and think tapering will start next week,” said Carl Hammer, head of foreign-exchange strategy at SEB AB in Stockholm. “The news about Summers is interesting if it is true, and is a small dollar positive. Everyone thinks he is going to be more hawkish” than his main rival Yellen, he said.
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