Dollar, Stocks Gain as Treasuries Fluctuate Before FedStephen Kirkland, Alex Barinka and Nick Taborek
The dollar gained, while most U.S. stocks rose and Treasuries pared an advance, as investors awaited tomorrow’s Federal Reserve statement for clues to the central bank’s bond-buying plans. Australia’s dollar fell as the central bank indicated it may lower interest rates.
The Bloomberg Dollar Index, a gauge of the currency against 10 major peers, jumped 0.3 percent to 1,026.82 at 4 p.m. in New York. The S&P 500 added less than 0.1 percent to 1,685.96 and is up 5 percent in July, its biggest monthly gain since January. Ten-year Treasury yields were little changed at 2.60 percent after losing three basis points earlier. The Aussie weakened at least 0.4 percent against its 16 major peers, tumbling 1.6 percent versus its U.S. counterpart. The S&P GSCI gauge of 24 raw materials slipped 0.7 percent for a fifth straight drop as metals led losses.
Goodyear Tire & Rubber Co. and Pitney Bowes Inc. jumped more than 8.9 percent to lead the S&P 500 to an earlier gain of as much as 0.5 percent after earnings beat estimates. Reserve Bank of Australia Governor Glenn Stevens said inflation data leave room for rate cuts as central banks in the U.S., Europe and the U.K. meet this week. American consumer confidence weakened in July while a gauge of U.S. home prices rose the most in more than seven years, economic reports showed today.
“We’re waiting again to hear what the Fed has to say because everybody’s on tenterhooks,” Sarah Hunt, an associate fund manager and analyst who helps oversee $4.5 billion at Purchase, New York-based Alpine Woods Capital Investors LLC, said in a phone interview.
The Federal Open Market Committee, which has said it may start paring stimulus should the U.S. economy meet the central bank’s forecasts, starts a two-day meeting today. The Fed will probably maintain its benchmark interest rate at 0.25 percent, economists predict. Policy makers will begin to reduce the central bank’s bond-purchase program in September, a Bloomberg survey of economists shows. A government report tomorrow is forecast by economists to show that growth in U.S. gross domestic product slowed to 1 percent in the second quarter from 1.8 percent in the first three months of the year.
The S&P 500 has advanced this month as companies from Apple Inc. to Visa Inc. reported better-than-estimated earnings. Of the 302 companies in the S&P 500 that posted quarterly results so far in the reporting season, 73 percent have exceeded analysts’ estimates for profit and 55 percent have topped sales projections, data compiled by Bloomberg show.
Eastman Chemical Co. gained 6.3 percent after raising its full-year profit forecast. Pfizer Inc. reported second-quarter profit that beat analysts’ estimates, sending the shares up 0.4 percent.
Obama, in a speech today in Chattanooga, Tennessee, argued that years of budget fights have diverted attention from the need to help middle-income Americans recover from the recession, according to administration officials.
As an alternative to seeking quick passage of the deficit-reduction formula that has eluded lawmakers for two years -- some combination of increased tax revenue and entitlement curbs -- Obama proposed spending more on job creation efforts. The initiatives would include help for manufacturing, worker training, and infrastructure improvements.
The S&P/Case-Shiller index of property values climbed 12.2 percent from May 2012, the biggest 12-month gain since March 2006, after advancing 12.1 percent a month earlier. The median projection of 31 economists surveyed by Bloomberg called for a 12.4 percent advance. The Conference Board’s index of U.S. consumer confidence decreased to 80.3 in July from 82.1 a month earlier, less than the median projection in a survey of economists for a reading of 81.3.
More than two shares advanced for every one that fell in the Stoxx 600, with trading volumes 10 percent below the 30-day average.
Electricite de France SA, Europe’s biggest power generator, climbed 7.4 percent to the highest since November 2011 after raising its forecast for 2013 profit growth. Alcatel-Lucent SA, a French maker of phone equipment, jumped 14 percent as sales rose in the second quarter and the company said Qualcomm Inc. agreed to buy a minority stake.
BP Plc, Europe’s second-biggest oil company, declined 3.4 percent after reporting profit that missed estimates. Barclays Plc, the U.K.’s second-largest bank by assets, retreated 5.7 percent after saying it will raise 5.8 billion pounds ($8.9 billion) in a rights offering.
OAO Uralkali tumbled as much as 25 percent in Moscow as the world’s largest potash producer forecast global prices for the fertilizer ingredient will fall about 25 percent as it quits a trade venture with Belarusian Potash Co. and boosts shipments independently to countries including China.
K+S AG, Europe’s largest potash producer, plunged 24 percent to the lowest in six years in Frankfurt trading. Israel Chemicals Ltd. sank 18 percent in Tel Aviv. Potash Corp. of Saskatchewan Inc. sank 16 percent in Toronto and Mosaic Co. tumbled 17 percent in New York.
Most emerging-market stocks advanced even as the MSCI Emerging Markets Index slipped 0.2 percent. The gauge is 1.3 percent higher in July, headed for its best month since January.
The Shanghai Composite advanced 0.7 percent after the People’s Bank of China added 17 billion yuan ($2.8 billion) to the financial system using reverse repos for the first time in five months. Benchmark gauges in South Korea, Taiwan and Turkey advanced at least 0.9 percent.
India’s Sensex index lost 1.3 percent, declining for a fifth day in the longest slump in more than three months. The central bank kept interest rates on hold in line with analyst estimates and said increases in other borrowing costs this month to stem the rupee’s slide will be rolled back as the currency stabilizes. The rupee weakened versus all 16 major peers.
The Aussie slid 1.6 percent to 90.63 U.S. cents after touching 90.44 cents, the weakest level since July 15.
The Australian dollar has tumbled 10 percent this year, the most among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes, while the yen dropped 8.5 percent. The euro strengthened 5.4 percent. The pound slipped 0.6 percent to $1.5245 and lost 0.6 percent versus the euro. The Bank of England and European Central Bank announce rate decisions on Aug. 1.
Sweden’s krona weakened more than 1 percent against the euro today after a report showed the nation’s economy unexpectedly shrank in the second quarter. Gross domestic product contracted 0.1 percent in the three months through June from the previous quarter, when it grew 0.6 percent, preliminary data from Stockholm-based Statistics Sweden showed. Economists in a Bloomberg survey had predicted a 0.1 percent expansion.
The rate on 10-year Italian bonds fell five basis points to 4.40 percent as the nation met its maximum target of 6.75 billion euros ($8.96 billion) at the sale of securities maturing in June 2018 and March 2024 today.
Copper fell 2.1 percent in London while palladium sank 1.8 percent to lead declines in metals. Gold for immediate delivery was little changed. Oil fell 1.4 percent to $103.08 a barrel, a three-week low, before tomorrow’s U.S. GDP report. Corn rallied from the lowest price in almost 34 months, adding 0.9 percent.