Commodities Fall as Treasuries Climb; Dow Rises to Record

Silver, heating oil and gold led declines in commodities while Treasuries rose and U.S. benchmark stock indexes traded at or near all-time highs. European equities retreated from the highest level since 2008 while Italian bonds advanced as the nation sold debt.

The S&P GSCI Index of commodities fell 0.8 percent by 4:26 p.m. in New York. Ten-year Treasury yields lost three basis points to 2.97 percent, dropping from a two-year high. The Dow Jones Industrial Average rose 0.2 percent to a record while the Standard & Poor’s 500 Index closed down less than 0.1 percent at 1,841.07. The Stoxx Europe 600 Index declined 0.2 percent while Italian 10-year yields dropped 12 basis points. Japan’s Nikkei 225 Stock Average capped its biggest annual increase since 1972.

Contracts to purchase previously owned U.S. homes rose less than forecast in November, indicating higher borrowing costs are holding back the recovery in residential real estate. The Bank of Japan is continuing stimulus, weakening the yen and sending the Nikkei 225 above 16,000 for the first time since 2007. Trading volumes on the S&P 500 and Dow Jones Industrial Average were more than 35 percent below the 30-day average before the Jan. 1 New Year holiday, data compiled by Bloomberg showed.

“Those who are fully invested are enjoying what’s been an incredible year and getting ready to worry about the start of next week,” Richard Sichel, chief investment officer at Philadelphia Trust Co., said in a phone interview. He helps oversee $1.9 billion. “In the meantime, investors are in neutral.”

Commodity Movers

Cocoa, silver and heating oil lost at least 1.4 percent to drive declines in 20 of 24 commodities tracked by the S&P GSCI index.

West Texas Intermediate crude oil slipped 1 percent to $99.29 a barrel after topping $100 Dec. 27 for the first time since October. Gold for February delivery fell 1.5 percent to $1,195.80 an ounce and silver declined 2.5 percent to $19.5760 an ounce. Gold has retreated 29 percent this year, on track for the worst annual drop since 1981.

The S&P 500 closed at an all-time high of 1,842.02 Dec. 26. U.S. investors returned to stocks in this year, just in time for the best relative returns versus bonds on record. Companies in the S&P 500 are valued at $3.7 trillion more than they were 12 months ago as the Federal Reserve plans to pare asset purchases starting next month.

The S&P 500 has rallied 29 percent in 2013, set for its biggest annual gain since 1997 and beating government debt by 32 percentage points, the widest spread since at least 1978, according to data compiled by Bank of America Merrill Lynch and Bloomberg.

Crocs, Disney

Among stocks moving today in the U.S., Crocs Inc. jumped 21 percent for its biggest gain in four years after saying its chief executive officer will retire and Blackstone Group LP will invest $200 million in convertible preferred stock in the maker of colorful plastic clogs. Walt Disney Co. jumped 2.5 percent after an analyst upgrade.

An S&P index of 11 homebuilders rallied for a sixth straight day and reached a six-month high even after data on home sales missed economists’ estimates.

A gauge of pending home sales in the U.S. increased 0.2 percent, the first gain in six months, after a 1.2 percent drop in October that was larger than initially reported, the National Association of Realtors said. The median projection in a Bloomberg survey of economists called for a 1 percent advance.

The Nasdaq Composite Index fell 0.1 percent.

The Stoxx 600 gained 2 percent last week, reaching its highest level since May 2008, following better-than-forecast U.S. economic data. The gauge advanced 17 percent this year and is on pace for its biggest annual rally since 2009.

European Markets

International Personal Finance Plc jumped 10 percent in London after the Leeds-based lender of small, unsecured cash loans slumped 26 percent in the previous two days following the announcement that its Polish unit was fined. Swatch Group AG, the world’s largest watchmaker, lost 0.8 percent after a fire at one of its workshops.

Italy sold 5.5 billion euros ($7.56 billion) of 2018 and 2024 securities today, the region’s final auction of government debt this year. Yields on its five-year debt dropped 11 basis points, or 0.11 percentage point, to 2.71 percent.

Yields on Spain’s 10-year bonds fell eight basis points to 4.14 percent, while the yield for similar-maturity U.K. bonds dropped four basis points to 3.03 percent.

About two stocks rose for each that fell on the MSCI Asia Pacific Index, which gained for a 10th trading session. The gauge has rallied more than 2 percent since Dec. 17, when the Fed announced the first cut to its record stimulus program amid an improving economy. Markets in the Philippines and Thailand were closed for holidays.

Tropical Cyclone

Shares of iron-ore producers rose in Sydney after shipments of the commodity from northern Australia, the biggest exporter, were halted as Tropical Cyclone Christine threatened towns as well as oil and gas production. BHP Billiton Ltd. and Rio Tinto Group advanced at least 1 percent.

The MSCI Emerging-Market Index rose 0.5 percent today with valuations of 10.5 times projected 12-month earnings at a 29 percent discount to the MSCI World Index of developed-market shares, the biggest gap in five years.

The Turkish lira rose 1.6 percent versus the dollar after dropping to a record low Dec. 27 amid a corruption probe that has engulfed the government. The Borsa Istanbul 100 Index of shares jumped 6.4 percent, the biggest advance since Sept. 19.

The yen has weakened more than 17 percent versus the dollar this year, the worst performance among 16 major currencies behind a 19 percent slump in South Africa’s rand. Japan’s currency dropped 0.3 percent to 145.02 per euro today.

Best Performers

The Nikkei 225 rallied 57 percent in 2013, the largest annual increase since a 92 percent surge in 1972. Today was the last day of trading in Japan until Jan. 6. The nation’s shares have been the best performers this year among 24 major developed markets tracked by Bloomberg.

Prime Minister Shinzo Abe’s hand-picked BOJ governor, Haruhiko Kuroda, is buying more than 7 trillion yen ($66 billion) of bonds a month to try to spur 2 percent inflation in about two years. The central bank has scope to expand purchases even more, according to 71 percent of economists polled by Bloomberg this month.

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