U.S. Stocks Little Changed Amid Deals; Yen, Gold AdvanceJoseph Ciolli and Jeremy Herron
Gold rallied with the yen as escalating tension between Russia and western nations over Ukraine damped demand for riskier assets. U.S. stocks were little changed near a two-month low.
The Standard & Poor’s 500 Index rose less than one point to 1,920.23 at 4 p.m. in New York. The gauge climbed as much as 0.4 percent after sinking 0.5 percent earlier in the session. The Stoxx Europe 600 Index dropped to a three-month low and copper slid to the lowest since June on euro-area growth concerns. The yield on 10-year Treasury notes touched a two-month low. The yen rose the most in four months against the dollar and gold had its best gain in six weeks.
NATO said there’s a risk of Russia sending troops into Ukraine after President Vladimir Putin massed troops on his country’s western border. Putin ordered restrictions on food imports to strike back at countries that have imposed sanctions on Russia. The S&P 500 traded near its average level for the past 100 days after yesterday dropping 1 percent to the lowest since May.
“There’s going to be a lot of noise intraday going forward, but we still see the fundamental trend moving higher,” Sam Turner, a fund manager with Richmond, Virginia-based Riverfront Investment Group LLC, said in a phone interview. His firm oversees $4.6 billion. “There are geopolitical concerns in the backdrop. We might slip back to flush out the remaining weak hands, but we’re recommending buying this dip.”
The S&P 500 lost more than 3.5 percent since reaching a record of 1,987.98 on July 24 and came within about 70 points of erasing its gain for the year. The benchmark gauge tumbled 2.7 percent last week, the most since June 2012. It has added 3.9 percent in 2014.
Producers of consumer staples gained 0.9 percent today, led higher by Molson Coors Brewing Co. The beer maker jumped 5.8 percent, the most in the S&P 500, after reporting earnings that topped estimates. Procter & Gamble Co. climbed 2.1 percent for the biggest advance among large companies.
Merger news weighed on equities, as more than $20 billion was erased from the market value of Time Warner Inc., Sprint Corp., T-Mobile US Inc. and Walgreen Co. the day after two proposed mergers unraveled and the tax treatment of a third was reassessed.
Sprint slid 19 percent after it ended talks to acquire T-Mobile, while Time Warner tumbled 13 percent after 21st Century Fox Inc. withdrew its takeover bid. Walgreen Co. retreated 14 percent as the biggest U.S. drugstore chain said it will buy the shares in Alliance Boots it doesn’t already hold, and won’t use the deal to move its tax address abroad.
The mounting tensions in Ukraine spurred demand for haven assets, with the yen and gold rallying. NATO Deputy Secretary General Alexander Vershbow said that Russia has amassed about 20,000 troops along its border with eastern Ukraine. U.S. Defense Secretary Chuck Hagel told reporters in Germany today that the threat of a Russian incursion in Ukraine is a “reality.”
Putin is showing no sign of backing down over Ukraine, and said his government has proposed retaliatory measures after the U.S. and the European Union tightened sanctions last week. It is drawing up a list of restricted goods, aimed at banning or limiting food and agricultural imports for one year from countries that have imposed or supported sanctions, according to the Kremlin website.
“There is clearly a risk-off move,” said Vincent Chaigneau, global head of rates and foreign-exchange strategy at Societe Generale SA in Paris. “It’s mostly the stories about Ukraine and Russia. There is a little bit of stress everywhere in the global markets and this is benefiting Treasuries despite the strong data we had yesterday in the U.S.”
Gold futures jumped 1.8 percent to settle at $1,308.20 in New York, the biggest gain for the most-active contract since June 19. The precious metal has rallied 8.8 percent this year. Silver added 1 percent to $20.024.
The yen advanced against all of its 31 major peers, adding 0.5 percent to 102.08 per dollar. It appreciated 0.5 percent to 136.58 per euro.
The MSCI Emerging Markets Index fell 0.5 percent, the lowest since July 1. Russia’s Micex Index slipped 1.7 percent and the yield on 10-year Russian bonds rose 20 basis points to 9.90 percent, the highest since October 2009.
The yield on 10-year Treasury notes fell two basis points to 2.47 percent. The rate earlier touched the least since May.
In Europe, the Stoxx 600 sank to its lowest level in more than three months as data showed that Italy unexpectedly returned to recession and German factory orders dropped the most since 2011 as slowing global growth and rising tensions over Ukraine threaten the euro area’s recovery.
Copper futures for delivery in September slipped 1.2 percent to settle at $3.166 a pound in New York, after touching $3.157, the lowest since June 26. Concern grew that a faltering recovery would reduce demand for industrial metals.
The Stoxx 600 fell 0.9 percent, paring its advance in 2014 to 0.2 percent after earlier briefly erasing all of its 6.5 percent rally from the beginning of this year through its June 10 high.
“People are taking risk off as they go on holiday, bearing in mind that we’ve got big geopolitical events going on in the background,” Kevin Lilley, who helps manage the equivalent of $27 billion as head of European equities at Old Mutual Global Investors U.K. Ltd., said by telephone from London.
Italy’s 10-year government bonds fell for a second day as signs that the euro-area’s economic recovery is losing momentum damped demand for the region’s higher-yielding assets. German government bonds rose, pushing the 10-year yield to a record-low 1.103 percent.