U.S. Stocks Decline as Oil Slips With Dollar: Markets Wrap

  • Risks are being downplayed in equity market, El-Erian says
  • European stocks’ rally falters as banks under pressure

Jane: Investors Should Be More Positive on Europe

U.S. stocks edged lower, with the Dow Jones Industrial Average failing to make progress toward 20,000, as oil retreated and a rally in the dollar faltered in light trading ahead of the holidays.

The Dow slipped 31 points to 19,943 in trading 21 percent lower than the 30-day average. An advance in European stocks ended after equities reached the highest level of the year, as banks dragged indexes lower. Oil fell after a government report showed U.S. crude stockpiles increased for the first time in five weeks. The yen strengthened and the dollar slid from the highest since 2003 versus the euro.

Volumes are thinning and swings in global equities are muted, with a volatility gauge for European shares at the lowest since 2014. Stocks have been rising to new highs on the prospects for increased government spending in the U.S. Mohamed El-Erian and his former colleagues at Pacific Investment Management Co. say now’s a good time to take advantage of the latest rallies in global financial markets and scale back from risk.

Read More: Check out our Markets Live blog.

“It makes total sense to take some money off the table,” El-Erian, the chief economic adviser at Allianz SE and a Bloomberg View columnist, said Tuesday. “We’ve priced in no policy mistakes. We’ve priced in no market accidents, and we’ve ignored all sorts of political issues,” he said on Bloomberg TV. In October, El-Erian said that he held about 30 percent of his own money in cash.

Stocks

  • The S&P 500 Index fell 0.2 percent at 2,265.22 at 4 p.m. in New York, after closing Tuesday a point below a record. Real-estate shares fell 1.3 percent for the biggest loss, while financial stocks weighed on the index with a 0.2 percent decline.
  • Data Wednesday showed that sales of existing homes rose more than forecast, adding to evidence the economy is picking up steam.
  • The Stoxx Europe 600 Index lost 0.2 percent, with a gauge of European banks among the worst performers. It lost 0.3 percent, while financial services companies dropped 0.8 percent.
  • Spanish banks fell after a ruling in the European Union’s top court that may result in them handing back billions of euros to mortgage customers. Italy’s Banca Monte dei Paschi di Siena SpA fell on concern it may fail in its efforts to raise 5 billion euros ($5.2 billion) of funds and after it said its liquidity may turn negative in four months.

Currencies

  • The Bloomberg Dollar Spot Index slipped 0.1 percent after climbing for two straight days. The measure’s gain for the quarter is 7.3 percent, heading for the biggest three-month advance since the third quarter of 2008.
  • The yen gained 0.3 percent to 117.54, after falling 0.7 percent on Tuesday. The euro added 0.4 percent to $1.043, after touching an almost 14-year low of $1.0352 yesterday.

Bonds

  • Yields on 10-year Treasury notes fell two basis points to 2.54 percent, after gaining two basis points Tuesday.
  • Germany’s 10-year bund yields dropped two basis points to 0.25 percent.

Commodities

  • Oil fell 1.5 percent to settle at $52.49 a barrel in New York. Crude stockpiles rose 2.26 million barrels last week, according to the Energy Information Administration.
  • Gold futures fell for a second day, sliding less than 0.1 percent to end at $1,133.20 an ounce, after closing near a 10-month low Tuesday.
  • Copper futures posted the lowest close in a month, with the contract falling 0.2 percent to settle at $2.497 a pound in New York. Volume on the Comex was 49 percent below the 100-day average for this time.
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