U.S. Stocks Close Little Changed as Apple Drop Offsets Oil Gains

  • Apple falls to 2014 low on report about iPhone chip shipments
  • Brazilian shares advance after Rousseff suspended from office

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U.S. stocks ended virtually unchanged after a whipsaw session, after oil staged a rebound to offset losses by Apple Inc., as investors awaited additional economic data for clues on the health of the world’s largest economy.

Apple sank to the lowest since June 2014 after Nikkei reported that shipments of iPhone chips for the remainder of the year will likely shrink versus a year ago. After seesawing between gains and losses, crude rose to a six-month high, as traders weighed concern of a reduction in global supply with Canadian producers planning to resume oil-sands output. Brazilian equities rallied, while the real weakened, after President Dilma Rousseff was suspended from office.

Bullish momentum in equities from a February low faltered this month, as signs of weakness in the global economy heightened concerns over whether central bank officials will be able to effectively boost growth. Since a high on April 20, the S&P 500 has traded in a tight range amid tepid earnings. After disappointing results from Walt Disney Co. and Macy’s Inc. renewed worries about the American consumer yesterday, investors are looking to government data on Friday that is forecast to show retail sales rebounded in April.

“When there’s something that points to softer retail sales, be it from Macy’s or Apple, you have investor concerns building around the state of the U.S. economy,” Joe Quinlan, chief market strategists at U.S. Trust, Bank of America Private Wealth Management, said by phone. “Then you also have to layer in the weaker-than-expected employment numbers. It’s always one or two threads that intersect to cause the market to rethink itself.”

Stocks

The S&P 500 fell by less than 1 point at 4 p.m. in New York. Microsoft Corp. added 0.9 percent, rising for a third day, while Monsanto jumped 8.4 percent after people familiar with the matter said Bayer AG is exploring a potential bid for the U.S. competitor. Kohl’s Corp. sank 9.2 percent after its earnings and sales results missed predictions.  

A U.S. government report today also showed initial jobless claims rose 20,000 to 294,000 in the week ending May 7. The median forecast of economists called for a decline to 270,000.

The Stoxx Europe 600 Index dropped 0.5 percent. Credit Agricole SA was among the biggest losers, slid 4.9 percent after posting a 71 percent drop in first-quarter profit.

Brazil’s Ibovespa rallied 0.9 percent, while the real led losses among major currencies today, after the nation’s Senate voted to suspend Rousseff from office to face an impeachment trial, ushering in a new government to take command of Latin America’s largest economy.

The benchmark gauge has risen 21 percent this year on bets that a new government will be better able to pull the country out of its worst recession in a century. Societe Generale SA’s Regis Chatellier said most of the momentum leading up to the ouster has already been factored into the country’s assets.

Commodities

Crude rose to $46.70 a barrel in New York, the highest since Nov. 3. Producers in Canada plan to resume output at some oil-sands sites after wildfires took production offline, while Nigeria said militant attacks have cut output by as much as 600,000 barrels a day. U.S. inventories dropped by 3.4 million barrels last week, government data showed Wednesday.

Copper for three-month delivery on the London Metal Exchange reversed to retreat 2 percent. Codelco, the world’s biggest producer, sees prices rising toward the end of next year as investment cuts hasten a re-balancing of global supply and demand. The LMEX Metals Index, which tracks the six main metals traded on the LME, gained 0.9 percent on Wednesday, rebounding from a one-month low.

Gold in the spot market fell 1.1 percent after a two-day gain. A World Gold Council report showed Thursday that global demand in the first quarter was the second-highest on record.

Bonds

Treasury 30-year bonds fell before a $15 billion sale of the securities Thursday, the last of three U.S. auctions this week. Long-term U.S. yields rose more than those on short-term securities ahead of the offering, which follows $47 billion of Treasury issuance and at least $41 billion of new corporate debt this week.

The yield on the 30-year Treasury rose two basis points to 2.6 percent.

U.K. 10-year government bonds fell after a 10-day run of gains that was their longest winning streak since at least 1989. U.K. securities have returned 5.6 percent in 2016, almost twice as much as their euro-area peers, according to Bloomberg World Bond Indexes.

Italian bonds also declined as the market absorbed 7.5 billion euros ($8.6 billion) of securities the government sold via auction on Thursday. The 10-year yield climbed three basis points to 1.5 percent.

Currencies

The dollar rose for the third time in four days against the yen. Bank of Japan Governor Haruhiko Kuroda said policy can be loosened further if needed.

The krone was among the biggest gainers after Norway’s central bank left its benchmark rate at a record low as the government spends more of its vast oil wealth to keep the economy from slipping into a recession.

The pound advanced against the euro as Bank of England policy makers led by Governor Mark Carney voted unanimously to leave interest rates unchanged. Bank of America Merrill Lynch had said one or two of the nine-member panel could vote for a cut.

The yuan weakened 0.3 percent in Shanghai, narrowing its premium to the offshore exchange rate after the spread widened on Wednesday to 0.6 percent, the most since February. The divergence prompted speculation this week that the People’s Bank of China would intervene.

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