U.S. stocks snapped the longest rally since January as Greek lawmakers debated a new bailout package amid protests outside parliament. Treasuries rose as the Federal Reserve indicated interest rates won’t be increased rapidly this year, and Canada’s dollar led commodity currencies lower.
The Standard & Poor’s 500 Index was down 0.1 percent by 4 p.m. in New York after trading little changed for most of Wednesday following a 3 percent rally the past four days. Yields on 10-year Treasury notes fell five basis points to 2.35 percent. The loonie tumbled to its weakest level since 2009 after the Bank of Canada cut benchmark rates, fueling a selloff in currencies from New Zealand to South Africa. Crude oil slid.
Riot police fired tear gas to disperse crowds gathered across the road from the Greek parliament, where lawmakers are weighing the austerity measures demanded in return for fresh aid. Fed Chair Janet Yellen reiterated in her congressional testimony that the bank remains on track to raise rates this year, though the pace of any increases will be gradual.
“A rate hike has been baked into prices for some time already,” Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees $110 billion, said by phone. “She has to consider what’s going on with the turmoil in Europe, and deflationary pressures are still formidable. Going forward, earnings will be important.”
The Bloomberg Commodity Index lost 0.9 percent Wednesday, as a strengthening dollar damped demand for assets from precious metals to oil. West Texas Intermediate crude sank 3.1 percent to $51.41 a barrel after an increase in oil inventories at the Cushing, Oklahoma hub.
The loonie slid 1.5 percent after Canada cut rates for the second time this year, a move of support for the economy which is laboring under the retreat in commodities. The Aussie slumped 1 percent, while the South African rand was down 0.8 percent. A drop in milk powder prices at a fortnightly dairy auction hit the kiwi, with the currency extending losses at its weakest level since 2010 before inflation data Thursday.
The S&P 500 had been rallying along with global stocks after Greece’s prime minister agreed to the bailout deal and China appeared to stabilize its stock-market rout. The Shanghai Composite Index fell 3 percent Wednesday in a second day of losses, reinvigorating concerns after better-than-expected economic growth data failed to boost investor confidence.
U.S. equities traded moderately higher earlier in the session as results from Bank of America Corp. and U.S. Bancorp boosted financial shares. Celgene Corp. jumped 7 percent after raising its profit forecast and agreeing to acquire Receptos Inc. for $7.2 billion. Energy shares led declines amid oil’s drop.
Netflix Inc. surged about 10 percent in extended trading after the company said growth in international audiences boosted subscriptions to its Internet TV service. Netflix has been the best performer in the S&P 500 this year. Intel Corp. added 3.2 percent as the biggest maker of semiconductors predicted third-quarter sales that may exceed analysts’ predictions.
The S&P 500 turned negative in afternoon trading after footage of the Greek protests emerged. The demonstrations show the challenge faced by Prime Minister Alexis Tsipras in convincing a country whose economy has shrunk by a quarter in the last five years to accept further spending cuts.
“If you take how far we’ve come in the last three days, throw a riot on TV and toss in the fact that it appears that Greek parliament is still debating this package -- that’s enough to hit the market late in the afternoon on a quiet day,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. in Milwaukee.
Equities investors largely ignored Yellen’s testimony, as it tracked closely with comments she made July 10, while bond traders jumped on to her reiteration that rate increases this year will be gradual.
Fed funds futures showed a 37 percent chance the central bank will boost its benchmark rate in September, up from 31 percent on Tuesday. Futures are pricing in 70 percent chance of a hike by December, up from 66 percent, according to data compiled by Bloomberg.
“The market in the last two months has begun to embrace the view that the pace will matter more than the liftoff,” said George Goncalves, the head of interest-rate strategy at Nomura Holdings Inc., one of the 22 primary dealers that trade directly with the Fed. “Earlier in the year, the market wasn’t buying into the concept.”
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, climbed 0.5 percent, with the dollar adding 0.5 percent to $1.0950 per euro.
Stocks in Europe advanced for a sixth day as gains in mining shares pushed the Stoxx Europe 600 Index to its longest winning streak since February.
Gold futures capped a fifth straight decline, with contracts for August delivery down 0.5 percent to $1,147.40 an ounce. The metal has lost 3.1 percent this year and is trading near a three-month low. Zinc climbed to a one-month high amid signs of tighter global supplies and faster-than-expected economic growth in China, the world’s biggest user.