S&P 500 Little Changed Near Record While Oil, Dollar Fall

June 30 (Bloomberg) -- Nick Nelson, head of global and European equity strategy at UBS, explains how a strong earnings season can continue to drive equities higher in spite of other market influences and how M&A activity and the Federal Reserve can impact markets. He speaks with Guy Johnson “The Pulse.”

The Standard & Poor’s 500 Index (BUSY) was little changed, capping its longest streak of quarterly gains since 1998, as housing data beat estimates to offset a weaker-than-forecast manufacturing reading. Oil fell with the dollar.

The S&P 500 slipped less than 0.1 percent at 4 p.m. in New York. The U.S. equities benchmark rose 4.7 percent in the quarter for its sixth straight advance. The Russell 2000 Index of small companies gained 0.3 percent, pushing its biggest monthly advance since September to 5.2 percent. The MSCI Emerging Markets Index climbed 0.4 percent for its best quarter since 2012. Crude lost 0.4 in New York, and the dollar weakened to a one-month low versus the euro. Corn futures had the biggest decline in a year, while copper rose to cap its best quarter since September.

A gauge of world equities advanced 1.7 percent in June for a fifth straight monthly gain, the longest streak since 2007, amid signs of economic revival and speculation the U.S. won’t increase rates anytime soon. Pending home sales in America jumped in May by the most in more than four years, a sign the residential market is rebounding. The Institute for Supply Management-Chicago Inc.’s gauge of manufacturing fell more than estimated in June. Sectarian fighting in Iraq hasn’t spread to the south, home to more than three-quarters of the nation’s oil production.

Photographer: Karim Sahib/AFP/Getty Images

Iraqi Kurdish forces take position as they fight jihadist militants from the Islamic State of Iraq and the Levant (ISIL) in the Iraqi village of Bashi, 20 kilometers south of the city of Kirkuk. Russia’s military is helping to prepare Iraq’s air force to recapture areas in the north seized by Islamist rebels. Close

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Photographer: Karim Sahib/AFP/Getty Images

Iraqi Kurdish forces take position as they fight jihadist militants from the Islamic State of Iraq and the Levant (ISIL) in the Iraqi village of Bashi, 20 kilometers south of the city of Kirkuk. Russia’s military is helping to prepare Iraq’s air force to recapture areas in the north seized by Islamist rebels.

“We’ve come a long way,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said by phone. “I think right now the data will have to dictate how aggressive people get in adding to their positions. You’ve got people off this week and the end of the quarter today. I don’t think anyone wants to ruffle any feathers here.”

Quarterly Streak

The S&P 500 climbed 1.9 percent in June for its fifth straight increase. The gauge has rallied 6.1 percent this year and is near its all-time closing high reached June 20. The index trades at 16.6 times the projected earnings of its members, near its highest valuation in four years.

D.R. Horton Inc. surged 3.1 percent to lead an S&P index of homebuilders higher. Micron Technology Inc. rallied 4.6 percent to pace gains among technology shares. Industrial stocks fell, with Boeing Co. sliding 1 percent.

The pending home sales index climbed 6.1 percent, the biggest advance since April 2010, after a revised 0.5 percent increase in April, the National Association of Realtors said today in Washington. The gain exceeded the most optimistic projection in a Bloomberg survey of economists, whose median forecast called for a 1.5 percent gain.

The Chicago ISM manufacturing index fell to 62.6 in June from 65.5 the prior month. The median forecast of economists in a Bloomberg survey projected a drop to 63.

Data Watch

Other reports this week will give further clues to the strength of the U.S. economy. Tomorrow brings data on manufacturing and auto sales, with the government’s payrolls report due on July 3 before the holiday weekend.

West Texas Intermediate slid 0.4 percent to $105.37 a barrel. Iraq’s oil minister said last week the nation’s crude exports will accelerate next month, adding to signs that violence in the country’s north isn’t affecting the oil-rich south. Its oil production was stable at 3.3 million barrels a day in June, according to JBC Energy GmbH.

Corn futures for December delivery fell 4.9 percent to settle at $4.2525 a bushel on the Chicago Board of Trade, the biggest decline since June 28, 2013. The U.S. government said domestic stockpiles will be larger than forecast.

Copper futures for September delivery gained 1.1 percent to settle at $3.2035 a pound. The price rose 5.9 percent this quarter.

Gold Advance

Gold erased earlier declines today and posted a second straight quarterly advance. Futures for August delivery rose 0.2 percent to settle at $1,322 an ounce on the Comex in New York. Prices touched $1,330.40, the highest for a most-active contract since April 14.

Prices climbed 10 percent this year, outpacing gains for indexes of commodities, equities and Treasuries.

The greenback fell 0.3 percent against the euro to $1.3693. The yen appreciated 0.1 percent to 101.276 per dollar after touching 101.24, the strongest since May 21. The U.S. currency had a third monthly decline against the yen after closing last week below the 200-day moving average for only the second time since 2012.

Treasuries rose in the first half of 2014 to almost erase last year’s losses as the U.S. economy contracted while conflict in Iraq and Ukraine fueled demand for the safest securities.

Emerging Stocks

The Bloomberg U.S. Treasury Bond Index climbed 3.2 percent this year through the end of last week, after declining 3.4 percent in 2013.

The benchmark 10-year yield slipped one basis point to 2.52 percent, according to Bloomberg Bond Trader data. German 10-year bonds gained, with the yield at 1.24 percent.

The MSCI Emerging Markets Index has climbed 5.6 percent this quarter, and rallied 2.2 percent in June for a fifth straight monthly increase. India’s S&P BSE Sensex index advanced 1.3 percent today, jumping 14 percent this quarter as investor optimism over the new government lured overseas funds. The Shanghai Composite Index rose 0.6 percent, capping the first quarterly gain since the period ended in September. Manufacturing data on July 1 may add to signs the biggest emerging economy is stabilizing after a two-quarter slowdown.

Bulgaria’s Sofix (SOFIX) index jumped 5.7 percent. The European Union gave Bulgaria authority to provide 3.3 billion levs ($2.3 billion) in state aid for lenders after authorities there arrested men they said had triggered a run on deposits of the third-largest bank.

Russia, Dubai

Russia’s ruble slipped 0.7 percent and the Micex lost 0.7 percent. Moody’s Investors Service lowered its outlook on the country’s credit to negative, citing geopolitical risk and the outlook for economic growth.

Dubai’s DFM General Index (DFMGI) tumbled 4.4 percent, bringing its decline since a May 6 peak to 27 percent, as investors sold shares in companies linked to the country’s real-estate industry. Trading was lower in the region as the holy month of Ramadan began this week. Volumes on the Bloomberg GCC 200 Index were 36 percent below the 30-day average, according to data compiled by Bloomberg.

Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle.

Argentine Debt

The country has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks.

The Stoxx 600 was little changed, with the index capping its fourth straight quarterly gain. The gauge slid 0.7 percent in June after rising in each of the quarter’s first two months.

The cost of insuring against losses on corporate debt was little changed, with the Market iTraxx Europe index of credit-default swaps on 125 investment-grade companies at 60.5 basis points. The gauge is heading for its third month of declines, down five basis points.

Bonds of companies worldwide generated average gains of 5.4 percent this year, according to Bank of America Merrill Lynch indexes. The $10 trillion gauge includes bonds from American conglomerate General Electric Co. to Brazilian state-run oil producer Petroleo Brasileiro SA and Spanish telephone company Telefonica SA among more than 14,500 issues.

The market is on pace to deliver annual returns exceeding 10 percent, the indexes show. Only two other times, in 2009 and 2012, have returns exceeded 10 percent based on Bank of America Merrill Lynch Global Corporate & High Yield index data going back more than 15 years.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron, Jeff Sutherland

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