U.S. Stocks Retreat as Treasuries Advance Amid Data

U.S. stocks fell, with the Standard & Poor’s 500 Index retreating from a record as bank earnings disappointed investors. Treasuries climbed and nickel advanced a fifth day while Turkey led declines in emerging-market shares.

The S&P 500 lost 0.1 percent to 1,845.89 by 4:30 p.m. in New York, leaving the gauge down 0.1 percent this year. Ten-year Treasury yields fell for the first time in three days. Turkey’s benchmark gauge slid almost 2 percent after the lira weakened to a record low and the Stoxx Europe 600 Index slipped from a six-year high. Nickel capped the biggest five-day rally since 2011 and U.S. natural gas rose to a three-week high while gasoline, Brent crude oil and copper led commodity decliners.

Citigroup Inc. reported fourth-quarter earnings today that fell short of analysts’ estimates while Goldman Sachs Group Inc. said trading revenue declined 13 percent. Initial claims for U.S. jobless benefits retreated last week to the lowest level since November. The cost of living in the U.S. climbed in December by the most in six months, indicating inflation is making progress in moving toward the Federal Reserve’s target.

“It’s not going to be a straight road up like what we saw in 2013,” Robert Pavlik, chief market strategist at Banyan Partners LLC, which manages $4.5 billion, said in a phone interview. “A lot of what we saw in 2013 was predicated on money flowing into the market from the Fed. It’s going to be an upwards revision to earnings consensus this year that will push the market higher.”

Earnings Analysis

The S&P 500 rose 0.5 percent yesterday, briefly erasing the gauge’s loss in 2014 as Bank of America Corp. fueled gains in financial shares after reporting that fourth-quarter net income more than quadrupled. Per-share profit for companies in the index probably climbed 4.9 percent on average in the last quarter, according to analysts surveyed by Bloomberg. Fourteen companies in the gauge report earnings today.

Today, financial shares plunged the most among 10 groups in the U.S. benchmark, losing 0.6 percent. Citigroup lost 4.4 percent as the third-biggest U.S. bank posted profit that missed Wall Street estimates as bond trading slumped. Goldman Sachs, the Wall Street bank with the highest return on equity, dropped 2 percent as trading revenue declined last quarter.

Best Buy Co. tumbled 29 percent as the retailer said U.S. same-store sales fell during the holiday-shopping season. The Dow Jones Industrial Average dropped 0.4 percent, led by UnitedHeath Group Inc., Goldman and Wal-Mart Stores Inc.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency versus a basket of 10 major peers, was little changed after earlier rallying as much as 0.2 percent to a four-month high. The greenback lost 0.1 percent against the euro to $1.3620. The dollar lost 0.3 percent to 104.30 yen after climbing 1.5 percent over the previous two sessions.

U.S. Inflation

The 0.3 percent gain in the U.S. consumer-price index was the biggest since June and followed no change the prior month, a Labor Department report showed. Prices rose 1.5 percent in 2013, the smallest calendar-year gain in three years.

Slower price increases may cause Fed officials to remain cautious as they taper the central bank’s unprecedented asset-purchase program. The Fed’s $85 billion monthly buying pace was slackened to $75 billion this month.

Fed Bank of Atlanta President Dennis Lockhart, who doesn’t vote on monetary policy this year, said yesterday that he expects inflation that’s been “too low” will accelerate toward the Fed’s 2 percent target.

Yields on 10-year Treasuries fell five basis points, or 0.05 percentage point, to 2.84 percent today, nearing a one-month low. The rate on 10-year German bunds dropped five basis points to 1.78 percent and the yield on U.K. gilts slid five basis points to 2.81 percent. Spain sold three-year notes at a record-low yield of 1.595 percent.

Emerging Bonds

Outgoing Fed Chairman Ben S. Bernanke said at a forum in Washington today that quantitative easing had helped the U.S, economy and that there is no immediate signs of it creating a bubble in asset prices.

Developing nations are flooding markets with a record amount of bonds before Fed cuts in monetary stimulus spur funding costs. International sales are up 13 percent to $51.5 billion so far in January, the busiest start to a year since Bloomberg began tracking the data in 1999.

The MSCI Emerging Markets Index slipped 0.3 percent today after see-sawing between gains and losses this week. The Borsa Istanbul 100 Index posted the biggest decline among 94 world stock gauges, sinking 1.9 percent.

Turkey’s lira weakened as much as 1 percent to 2.2124 per dollar before trading 0.7 percent lower at 2.2062. South Africa’s rand declined as much as 0.7 percent to 10.9610, the lowest intraday level in more than five years.

Commodity Markets

The Ibovespa fell for the first time in three days as Petroleo Brasileiro SA declined after denying a report that it plans to raise fuel prices in Brazil.

The S&P GSCI Index of 24 commodities retreated 0.2 percent, erasing earlier gains as gasoline dropped 1.2 percent. Brent crude, copper and lead all fell at least 0.6 percent while cattle futures extended gains to a record and cotton jumped to a three-month high.

Nickel climbed 1.1 percent in London for a fifth day of gains. The metal has gained 9.6 percent in the past five sessions, the most since October 2011. Indonesia, the biggest producer of nickel, restricted shipments starting Jan. 12, fueling speculation global supplies will tighten.

Natural gas futures rose as much as 3.9 percent to a three-week high in New York on speculation another wave of cold air over the U.S. will stoke demand for the heating fuel.

European Moves

The Stoxx 600 gauge fell for the first time in five days, losing 0.2 percent after closing yesterday at the highest level since January 2008. Fourteen of 19 main index groups retreated, with banks and technology stocks posting the biggest losses. Banco Popolare SC fell 3.9 percent and Intertek Group Plc slid 3.4 percent.

A gauge of basic-resources companies led advances in Europe. Rio Tinto Group, the world’s second-largest mining company, rose 2.5 percent in London after exceeding its 2013 cost-cutting targets. Polymetal International Plc gained 5.7 percent and Fresnillo Plc rose 5.2 percent after brokerages raised their stock ratings on the companies.

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