U.S. Stocks Fall, Treasuries Rise Before Fed’s Summit
U.S. stocks fell while Treasuries rose as investors awaited a speech from Federal Reserve Chairman Ben S. Bernanke to gauge the outlook for monetary policy. Apple Inc. (AAPL) surged after winning a patent case.
The S&P 500 slipped less than 0.1 percent to close at 1,410.44 at 4 p.m. in New York. Apple rallied to a record. Ten- year Treasury yields lost four basis points to 1.65 percent. Spot gasoline on the U.S. Gulf Coast rose to the highest price in almost four years after refineries shut as Tropical Storm Isaac approached Louisiana. The Stoxx Europe 600 Index rose and Spain’s bonds halted a three-day drop.
Bernanke probably won’t use his Aug. 31 speech in Jackson Hole, Wyoming, to suggest a third round of bond buying is imminent, according to economists including Michael Feroli at JPMorgan Chase & Co. and James O’Sullivan from High Frequency Economics. The central bank’s Jackson Hole summit was the scene of a 2010 speech when the Fed chairman foreshadowed a second round of quantitative easing.
“I don’t think he will give any profound statement on monetary easing,” David Sowerby, a money manager at Boston- based Loomis Sayles & Co., said in a telephone interview. His firm oversees about $170 billion. “At best, he will reiterate that the Federal Reserve stands ready for more easing if necessary,” he said. “In the next month or two, for the rally to continue, it needs more positive economic news.”
Volume for exchange-listed stocks in the U.S. was less than 4.5 billion shares, the lowest level since at least 2008 excluding days surrounding holidays, data compiled by Bloomberg show.
Members of the Federal Open Market Committee -- who meet next on Sept. 12-13 -- are closely monitoring unemployment and other data and have been divided about whether to spur expansion. The U.S. economy also remains beholden to political decisions made in Washington and in Europe, which is struggling to contain its debt crisis
Hewlett-Packard Co., Alcoa Inc. and Bank of America Corp. lost more than 1 percent to lead the Dow Jones Industrial Average down 33.3 points to 13,124.67.
International Business Machines Corp. slipped 1.1 percent to $195.69 and was the biggest drag on the price-weighted Dow after it agreed to buy Kenexa Corp. for about $1.3 billion in cash, adding social-networking services that help companies handle human resources and recruiting. Kenexa surged 41 percent.
Raw-material, telephone and industrial companies fell the most among the 10 main groups in the S&P 500, losing at least 0.3 percent. Technology stocks climbed the most. Apple rose 1.9 percent to close at an all-time high of $675.68 after a U.S. jury on Aug. 24 found that Samsung Electronics Co. infringed on six of its mobile-device patents, awarding Apple $1 billion in damages. Samsung tumbled almost 7.5 percent in South Korea, its biggest drop since 2008.
Hertz Global Holdings Inc. (HTZ) surged 8.1 percent, the most in almost two years, after striking a deal to buy Dollar Thrifty Automotive Group Inc. for about $2.6 billion in cash and secure its place as the No. 2 player in the U.S. car-rental market. Dollar Thrifty climbed 7.5 percent. Hudson City Bancorp soared a record 16 percent after M&T Bank Corp., which counts Warren Buffett’s Berkshire Hathaway Inc. among its largest investors, agreed to buy the bank to expand in New Jersey. M&T rallied 4.6 percent.
American stocks are dominating global equities by the most in a decade, taking a majority of the spots in a ranking of the 20 biggest companies, after earnings rose faster than the rest of the world as the global economy rebounded.
Apple, IBM, Wells Fargo & Co. and four more U.S. companies joined the top 20 since stocks peaked in 2007, bringing the total to 14, according to data compiled by Bloomberg. They replaced Moscow-based Gazprom OAO, China Petroleum & Chemical Corp. (600028) in Beijing, Petroleo Brasileiro SA of Rio de Janeiro and six others from Europe and Asia. Of the nine added, only BHP Billiton Ltd. and Nestle SA are based outside the U.S.
Gasoline surged as much as 4.1 percent to $3.2050 a gallon, a four-month high. Conventional 87-octane gasoline in the Gulf jumped 18.5 cents to 32 cents a gallon over October gasoline futures on the New York Mercantile Exchange, according to data compiled by Bloomberg at 2:03 p.m. in New York. That’s the largest premium since Sept. 19, 2008, when the Gulf Coast was ravaged by hurricanes Gustav and Ike.
Isaac may go ashore south of New Orleans early Aug. 29 as a hurricane. About 78 percent of oil production and 48 percent of natural gas output from the Gulf of Mexico has been halted. Gasoline also rallied as Venezuela’s Amuay plant, the country’s largest refinery, was shut as firefighters tackled flames following the Aug. 25 blast.
“Gasoline is high because details about the Venezuelan refinery outage are unknown,” Alexander Poegl, an analyst at JBC Energy GmbH in Vienna, said by phone today. Gasoline is also “reacting to Tropical Storm Isaac, which is shutting in oil output and refineries as it strengthens into a hurricane.”
The S&P GSCI Index of commodities erased earlier gains, slipping 0.5 percent as oil tumbled 0.7 percent to $95.47 a barrel as the closing of refineries curbed demand.
Gold futures rose to a 19-week high, with contracts for December delivery gaining 0.2 percent to settle at $1,675.60 an ounce. Silver for December delivery rose for a sixth straight day, extending its longest rally in 10 months, climbing 1.4 percent to $31.137 an ounce. The London Metal Exchange was closed because of the U.K. holiday.
The volume of shares changing hands on the benchmark Stoxx 600 was 64 percent lower than the average of the last 30 days because the U.K. market was closed for a public holiday. Q-Cells SE (QCE) surged 12 percent after South Korea’s Hanwha Group signed a deal to acquire the insolvent German producer of solar cells.
Nokia Oyj (NOK1V) rallied 7.7 percent, the biggest gain in the Stoxx Europe 600 Index (SXXP), following the Samsung ruling. The U.S. may ban sales of some Samsung handsets, potentially benefiting Nokia devices that run Microsoft Corp.’s Windows operating system.
The MSCI Emerging Markets (MXEF) Index fell 0.5 percent. The Shanghai Composite Index retreated 1.7 percent as a report showed Chinese industrial company profits slipped in July. Russia’s Micex Index and India’s Sensex lost at least 0.4 percent.
In Europe, German Finance Minister Wolfgang Schaeuble met his French counterpart to discuss Europe’s debt crisis. The two nations agreed to drive ahead measures on closer European integration in a renewed show of unity by the region’s two biggest economies. German Finance Minister Wolfgang Schaeuble, speaking after talks in Berlin with his French counterpart, Pierre Moscovici, said the two countries will create a working group to advance European Union cooperation on banking union, fiscal union and the strengthening of monetary union.
The Ifo institute in Munich said its business climate index dropped for a fourth straight month in August to its lowest reading since March 2010.
The yield on Spain’s 10-year bonds fell four basis points to 6.38 percent, outperforming similar-maturity German bunds, which were little changed.
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