U.S. stocks fell after the Standard & Poor’s 500 Index climbed to a record, while Treasuries gained and the dollar weakened. Russian stocks slid after the country completed its annexation of Crimea.
The S&P 500 fell 0.3 percent to 1,866.40 at 4 p.m. in New York, after reaching an all-time high of 1,883.97. The yield on 10-year Treasuries fell for the first time in three days, losing three basis points to 2.74 percent. The MSCI Emerging Markets Index gained 0.4 percent as Hong Kong’s Hang Seng China Enterprises Index (HSCEI) climbed 2.4 percent after entering a bear market yesterday. Moscow’s Micex Index lost 1 percent. The dollar lost 0.1 percent against the euro. Gold and oil advanced.
U.S. stock trading was subject to swings today because of quadruple witching, when futures and options contracts on indexes and individual stocks expire. The S&P 500 advanced 1.4 percent this week as better-than-estimated economic data overshadowed concern that benchmark interest rates may rise in the middle of next year. The European Union extended the list of prominent Russians subject to sanctions for their part in the annexation of Crimea, while ratings companies cut the nation’s outlook.
“It’s a combination of it being witching day, plus the continuation of uncertainty on the geopolitical front,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $150 billion of assets, said in a telephone interview. “That’s forced the traders to square their books going into the weekend. Days like this are typically volatile.”
The S&P 500 erased gains today after reaching levels it has repeatedly failed to surpass this month. Before today, its previous intraday high was 1,883.57, reached March 7, and the gauge touched 1,881.94 on March 6 and 1,882.35 on March 11. The index has climbed 0.4 percent for March, and is up 1 percent for the quarter.
The benchmark gauge rose 0.6 percent yesterday as reports on leading indicators and regional manufacturing topped forecasts. Reports on housing, gross domestic product and durable goods are among the economic data due next week. The index lost 0.6 percent and Treasury yields jumped the previous day after Federal Reserve Chair Janet Yellen said the central bank’s stimulus program could end this fall and the rates could rise about six months later.
Three rounds of Fed stimulus and low interest rates have helped boost the equity gauge as much as 178 percent from a 12-year low as U.S. stocks enter the sixth year of a bull market. Policy makers met this week as economic reports indicated the economy is pulling out of a slowdown linked to unusually harsh winter weather.
“The consensus believes that the stock market will continue moving higher as long as the economy improves,” Matt Maley, an equity strategist with Miller Tabak & Co., said in a phone interview from Boston. “But whether that’s enough to keep it rallying is another thing entirely.”
Treasury 30-year bonds rose as investors reevaluate how quickly Fed officials will increase interest rates. Fed Bank of St. Louis President James Bullard defended Yellen’s forecast on interest-rate increases, saying her remarks were in line with private surveys on when the central bank might start tightening policy.
Bullard also said that while the Fed is watching for signs of asset bubbles, policy makers don’t have a “preoccupation” with discouraging risk-taking.
Two-year notes were little changed to yield 0.43 percent, after surging seven basis points on March 19, the biggest one-day rise since 2011.
Developing-market equities posted a weekly gain of 0.8 percent, the most in more than a month and paring losses this year to 5.8 percent. The benchmark trades at a price-to-book ratio of 1.4, its cheapest level versus the MSCI World Index since 2004.
Chinese shares rallied amid speculation the government is loosening funding restrictions for property developers and banks to support growth. The Shanghai Composite Index climbed 2.7 percent, its biggest gain in four months.
The European Union signed an accord with Ukraine and expanded sanctions, amid the worst standoff between Russia and the West since the Cold War. S&P and Fitch Ratings cut Russia’s credit outlook to negative. U.S. President Barack Obama yesterday authorized potential future penalties on Russian industries including financial services, energy, metals and mining, defense and engineering.
The Stoxx Europe 600 Index gained 0.1 percent as euro-area consumer confidence increased more than economists forecast in March, adding to signs that the currency bloc’s recovery is gaining traction. The gauge capped its biggest weekly advance in five weeks, rising 1.8 percent.
The Bloomberg Dollar Spot Index, which monitors the U.S. currency against its 10 major counterparts, retreated 0.2 percent. The index had its biggest weekly gain in two months, advancing 0.6 percent for the five days, amid bets the Fed is moving toward raising interest rates.
The Australian dollar rose against all of its 16 major peers on speculation the country’s growth will defy a slowdown in China. It strengthened 0.5 percent to 90.84 U.S. cents today.
Gold advanced for the first time in five days, rising 0.4 percent to $1,336 an ounce on increasing demand for a haven. Bullion slumped this week after reaching a six-month high on March 17 amid turmoil over Ukraine. Oil added 0.6 percent to $99.46 a barrel today.
Palladium rose 2.3 percent and touched the highest level since August 2011 on concern that sanctions will trim supplies from Russia, the world’s biggest supplier of the metal used in pollution-control devices for cars.
Copper gained 0.8 percent after reaching a 44-month low this week. The metal has dropped this month on concern demand from top consumer China is poised to slow and as the Fed continued to trim its bond-buying program and signal higher interest rates.