Dollar, Stocks Slip as Treasuries Rise Amid Data: Markets Wrap

  • Bonds extend gains as European equities struggle for traction
  • Dollar slips after retail sales fall short of estimates

OPEC Risks Lower for Longer

The dollar fell while Treasuries rallied after tepid data on retail sales and inflation in the U.S. economy rekindled concern that growth won’t accelerate to levels economists project. U.S. stocks ended the day mixed, gold erased a weekly loss, and crude stayed below $48 a barrel.

The S&P 500 Index fell as Nordstrom Inc. became the latest retailer to miss earnings estimates. Small caps retreated 1 percent in the week, while technology shares edged higher. The dollar pared a weekly gain, while 10-year Treasury yields fell to 2.32 percent after retail sales in April rose less than forecast and inflation slowed. The Bloomberg Commodity Index rose for a third day, recovering from a 16-month low. European stocks struggled for direction following the biggest drop in three weeks Thursday.

Consumer prices rebounded last month, though at a slower pace than expected, while retail sales advanced after an unexpected drop in March. That was enough to bolster the case for Federal Reserve tightening in June, though not enough to ignite stocks or upset bonds. Investors cast a wary eye on Washington, where President Donald Trump escalated his war with fired FBI director James Comey at the same time his cabinet attempted to move forward on trade and regulatory reforms.

Read our Markets Live blog here.

Here are key events investors will be watching:

  • Chinese President Xi Jinping hosts world leaders including Russian President Vladimir Putin at a summit promoting his $500 billion trade-and-infrastructure plan, which is called the Belt and Road Initiative. The summit begins Sunday and will showcase Xi’s plans to remake global trade patterns in China’s favor.

Here are the main moves in markets:

Stocks

  • The S&P 500 fell 0.2 percent to end the week at 2,390.67 at 4 p.m. in New York. The index lost 0.4 percent in the period, the first slide in four weeks.
  • The Nasdaq Composite Index capped a weekly gain with a rise of 0.1 percent. Small caps in the Russell 2000 Index sank 1 percent in the five days.
  • The Stoxx Europe 600 rose 0.3 percent to turn in a gain of the same amount in the five days.
  • The MSCI Emerging Market Index rose 0.3 percent to cap a fifth straight advance, its longest rally since March. The measure climbed to the highest in 11 months.

Currencies 

  • The Bloomberg Dollar Spot Index slipped 0.3 percent. It rose 0.4 percent in the past five days, the first weekly advance in a month.
  • The yen added 0.5 percent to 113.289 per dollar, trimming its drop for the week. 
  • The euro gained 0.6 percent to $1.0929, to pare a weekly decline to 0.6 percent.

Bonds

  • The yield on 10-year Treasury notes fell six basis points to 2.32 percent, after retreating three basis points Thursday. That left the rate lower by two basis points in the week.
  • The five-year breakeven rate, which measures the yield spread between Treasuries and Treasury Inflation Protected Securities, fell about 0.06 percentage point Friday, on pace for the biggest drop since June, while the 10-year gauge sank the most this year.
  • Benchmark yields in France, Germany and the U.K. dropped.

Commodities

  • Oil’s rebound ran out of steam as investors focus on all the production that OPEC can do nothing about. Crude capped the first weekly gain with an advance of 1 cent Friday to settle at $47.84.
  • West Texas Intermediate rose 3.4 percent in the week, but is down 11 percent in 2017.
  • Gold advanced 0.3 percent to settle at $1,227.70 an ounce in New York for a third straight day of gains. The metal rose 0.1 percent in the week after touching the lowest level since mid-March on Tuesday.
  • Aluminum rose as China’s top state smelter suspends production capacity of intermediate material alumina. London aluminum added 0.9 percent to settle at $1,891 a ton.
  • Cotton prices jumped to the highest in almost three years amid signs of tightening global supplies and buoyant demand as exports reached a government target in the U.S., the world’s biggest shipper.
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