U.S. Stocks Fall With Treasuries; Commodites RallyCallie Bost and Jeremy Herron
U.S. stocks fell after the best four-day rally in a year for the Standard & Poor’s 500 Index. Treasuries slid amid comments from Federal Reserve officials signaling continued stimulus cuts, while Chinese data spurred a rally in copper.
The S&P 500 declined less than 0.1 percent at 4 p.m. in New York after rallying 3.9 percent in the previous four sessions. Ten-year yields climbed to the highest in two weeks. The Stoxx Europe 600 Index added 0.8 percent for a sixth day of gains. The euro fell against the dollar on speculation the European Central Bank may charge lenders to deposit spare cash. Turkey is selling the longest-dated dollar bonds on record. The S&P GSCI gauge of 24 raw materials rose 0.2 percent as oil held gains above $100 and copper gained the most in a month.
Amazon.com Inc. fell after an analyst downgrade and Procter & Gamble Co. tumbled after cutting its earnings forecast. St. Louis Fed President James Bullard said he expects U.S. output to grow 3 percent this year, after Fed Chair Janet Yellen said yesterday only a “notable change” in economic prospects would lead policy makers to slow the pace of reductions. The Senate cleared a measure suspending the U.S. debt limit for President Barack Obama’s signature. China’s export and import growth unexpectedly accelerated in January.
“We’re taking a breather here,” Phil Orlando, New York-based chief equity market strategist at Federated Investors Inc., which oversees about $376 billion, said in a phone interview. “Washington has essentially gotten out of the way, Yellen has told us monetary policy will be a continuation of what we’ve seen and we have a sense of what’s going to happen with the taper.”
Procter & Gamble lost 1.7 percent, helping to drag the Dow Jones Industrial Average down 0.2 percent. The world’s largest consumer-products maker cut its forecasts for profit and sales growth. Amazon slid 3.5 percent after UBS AG lowered the online retailer’s rating. Dow Chemical Co. fell 1 percent as an internal review concluded a breakup plan would reduce the company’s value. TripAdvisor Inc. jumped 7.2 percent as fourth-quarter revenue beat analysts’ estimates.
Bullard, a supporter of tapering bond purchases, said today in New York that fourth-quarter job growth was “pretty good” and forecast that inflation will speed up toward the 2 percent target. Yellen yesterday fueled bets the economy is strong enough to weather further stimulus cuts, which she said would continue in “measured steps.”
U.S. equities extended gains yesterday as policy makers moved toward an agreement on the debt ceiling. After the market closed, the House of Representatives voted to suspend the debt limit until March 2015. The Senate cleared the measure today for President Barack Obama’s signature. Treasury Secretary Jacob J. Lew had said the nation’s ability to borrow may not last past Feb. 27 without an extension in the ceiling.
Since Republicans took control of the House in 2011, debates over the debt ceiling led to eleventh-hour showdowns that raised concerns that the government could default on its obligations, roiling financial markets. This time, lawmakers are sending a bill to Obama with about two weeks to spare.
The 10-year Treasury note yield rose three basis points to 2.76 percent. The U.S. sold $24 billion of 10-year notes today and $16 billion of 30-year bonds tomorrow. It auctioned $30 billion of three-year securities yesterday.
The Fed has twice reduced the size of the monthly asset-purchase program, lowering bond buying to $65 billion in February from $85 billion last year. Three rounds of stimulus under previous Chairman Ben S. Bernanke have helped push the S&P 500 as much as 173 percent higher from a 12-year low in 2009.
In Europe, the Stoxx 600 capped its longest winning streak of the year with a sixth straight gain, as two shares rose for every one that fell and 18 of the 19 main groups gained.
ING Groep NV advanced 3.6 percent and Societe Generale SA, France’s second-largest bank, rose 4.7 percent. Telecity Group Plc slumped 9.6 percent after the U.K. manager of Internet infrastructure posted revenue that missed analysts’ projections.
“We are positive on European equities,” Herbert Perus, who helps oversee about $36 billion as head of equities at Raiffeisen Capital Management in Vienna, said by phone. “Some people feared that we would see some big earnings misses, but those fears are fading. We had a relatively calm discussion from Yellen on future tapering in the U.S. The risk is not so big.”
The euro slid 0.3 percent to $1.3593. The ECB is “very seriously” considering negative deposit rates, Reuters reported Executive Board member Benoit Coeure as saying.
Sterling strengthened against all of its 16 major peers on speculation Bank of England Governor Mark Carney will struggle to hold down interest rates as the U.K. economy improves. The pound jumped the most in three months versus the dollar rising 0.8 percent to $1.6592.
Turkey is selling securities that mature in February 2045, counting on investors overlooking a corruption probe and accelerating outflows that drove the lira to an all-time low.
The MSCI Emerging Markets Index advanced 0.8 percent to the highest level in almost three weeks, with benchmark gauges in Poland, South Africa, Thailand and the Czech Republic climbing at least 1 percent. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong added 1.4 percent, advancing 4 percent in two days, the biggest back-to-back rally since November.
Overseas shipments from China rose 10.6 percent from a year earlier, compared with the median projection of economists for a 0.1 percent gain, the General Administration of Customs said today in Beijing. Imports advanced 10 percent, leaving a trade surplus of $31.9 billion, the widest for January since 2009.
“Chinese trade data came in much better than expected,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, said in a note today. “The data suggests that growth slowdown was not as bad as feared. The numbers are positive for risk globally.”
MSCI Inc. is scheduled to announce its quarterly index reviews later today, according to its website.
The S&P GSCI commodities gauge touched the highest since December as extreme weather fueled supply concerns for crops and energy at a time of rising imports by China, the world’s largest consumer of everything from metals to pork.
Copper futures for delivery in March gained 1.3 percent to settle at $3.256 a pound on the Comex in New York, the biggest gain since Jan. 10. China’s purchases of the refined metal surged a record 536,000 tons, according to the nation’s customs agency.
Silver futures for delivery in March rose 0.9 percent to $20.341 an ounce. The metal posted an eighth consecutive advance, the longest streak since April 2011.
Gold futures for April delivery gained 0.4 percent to settle at $1,295, after reaching $1,296.40, the highest since Nov. 8. Prices capped a sixth session of gains, the longest rally since June 2012.
West Texas Intermediate oil rose 0.4 percent to $100.37 a barrel on the New York Mercantile Exchange, the highest settlement level since Oct. 18, after a government report showed inventories at Cushing, Oklahoma, fell for a second week.