U.S. Stocks Slip From Records on Data as Crude Oil SinksJoseph Ciolli and Jeremy Herron
U.S. stock indexes retreated from records as an unexpected drop in consumer confidence offset faster economic expansion. Treasuries rose, while the dollar weakened and crude oil slid to a more than four-year low.
The S&P 500 dropped 0.1 percent by 4 p.m. in New York, snapping a three-day climb and falling from an all-time high with the Dow Jones Industrial Average. The Stoxx Europe 600 Index rose 0.2 percent as Germany’s Dax Index capped its longest winning streak since May 2013. Yields on 10-year Treasuries fell five basis points to 2.26 percent, while the Bloomberg Dollar Spot Index touched a five-year high before reversing, as the euro strengthened. West Texas Intermediate crude sank 2.2 percent ahead of this week’s OPEC meeting.
Consumer confidence in the U.S. declined to a five-month low in November, to a level that was weaker than the most pessimistic estimate in a Bloomberg survey of economists. Data earlier in the day showed the U.S. economy expanded more than previously forecast in the third quarter. Venezuela, Saudi Arabia, Mexico and Russia failed to agree on a commitment to reduce oil supplies in a meeting today, according to Igor Sechin, who runs Russia’s state-backed oil producer OAO Rosneft.
“Sentiment is probably optimistic, but cautious,” Erik Wytenus, a Palm Beach, Florida-based global investment specialist at JPMorgan Private Bank, said by phone. The division oversees $1.052 trillion in client assets. “Part of the reason for that is that stocks have had a powerful run. Any time you have a bull market run like this, you tend to be more selective.”
The S&P 500 has rallied 11 percent from a low reached last month amid data indicating improvement in the U.S. economy, and as central banks elsewhere bolster stimulus. European Central Bank President Mario Draghi has pledged to stoke inflation as fast as possible, China unexpectedly cut interest rates, and Japan announced a surprise boost to its monetary base target Oct. 31.
The rally in American equities has pushed stock valuations to the most expensive level since the end of 2009. The S&P 500 trades at 17.2 times the projected earnings of its members, up from a multiple of 15.5 last month, data compiled by Bloomberg show.
Apple Inc.’s valuation briefly surpassed $700 billion today, before shares erased gains of as much as 1 percent to close down 0.9 percent at $117.60. No other U.S. company has breached the $700 billion level.
The U.S. economy expanded at a 3.9 percent annualized rate in the third quarter, up from an initial reading of 3.5 percent and more than the 3.3 percent median estimate in a Bloomberg survey, Commerce Department data showed today.
The Conference Board’s consumer confidence index fell to 88.7 in November from 94.1 a month earlier data showed before the start of the holiday shopping season. The median forecast in a Bloomberg survey called for an increase to 96.
“The Q3 GDP number is backward-looking, and therefore the market has taken a gigantic yawn to it,” Chad Morganlander, a money manager at St. Louis-based Stifel Nicolaus & Co., which oversees about $160 billion, said in a phone interview. “Portfolio managers and traders are squaring their books going into the holiday weekend -- speculators don’t want to get caught in a tornado.”
Yields on five-year Treasury notes fell three basis points, or 0.03 percentage point, to 1.57 percent as the U.S. sold $35 billion of the securities. The sale drew a yield of 1.595 percent, compared with an average forecast of 1.613 percent in a survey of 10 of the Fed’s 22 primary dealers.
Bloomberg’s dollar spot gauge, which tracks the U.S. currency against 10 major counterparts, fell 0.2 percent after earlier rising as much as 0.2 percent to its highest level on a closing basis since March 2009.
The euro gained 0.3 percent to $1.2474, after falling as much as 0.3 percent earlier in the session. The shared currency reached $1.2358 Nov. 7, its lowest level since August 2012. The yen strengthened 0.3 percent to 117.96 per dollar, after gaining as much as 0.5 percent earlier in the day. It reached 118.98 Nov. 20, the weakest since August 2007.
In Europe, an index of banks contributed the most to the Stoxx 600’s advance. HSBC Holdings Plc added 1.3 percent and Societe Generale SA rose 1.8 percent. The lenders retained their positions on UBS AG’s list of most-preferred European bank stocks. Deutsche Bank AG increased 1.9 percent.
The broader gauge closed at a two-month high. Oil and gas producers slid 1.1 percent to pace declines.
The Dax advanced 0.8 percent for a ninth day of gains. The stock measure closed at its highest level since July and has rebounded 16 percent from a one-year low touched in October amid growing optimism that the nation’s exporters will benefit from a weaker euro.
Germany’s 10-year yields declined three basis points to 0.75 percent as the rate on similar-maturity Italian bonds slipped four basis points, to 2.14 percent. Belgium’s 10-year yields fell as much as three basis points today to a record 1.02 percent, Austria’s touched an all-time low of 0.92 percent.
The MSCI Emerging Markets Index slipped for the first time in six days, losing 0.3 percent in a retreat from a three-week high. The Hang Seng China Enterprises Index of mainland Chinese companies listed in Hong Kong slipped 0.6 percent after its biggest gain in a year yesterday. The Shanghai Composite Index climbed 1.4 percent to a three-year high.
The Bloomberg Commodity Index advanced 0.4 percent as coffee and cotton advanced with silver.
WTI oil for January delivery dropped to $74.09 a barrel, its lowest settlement since September 2010. Brent crude futures declined 1.7 percent to $78.33 per barrel in London.
A coordinated cut in oil production by the Organization of Petroleum Exporting Countries is inevitable, Deutsche Bank AG said in a report. The group, which meets in Vienna Nov. 27, is unlikely to make a reduction large enough to remove market oversupply, Citigroup Inc. said in a report.
Twenty energy analysts surveyed last week by Bloomberg News were divided on whether a reduction in output will be agreed to, with half predicting a cut and the rest no action.