U.S. stocks fell with emerging-market equities as unrest in Hong Kong added to geopolitical uncertainty and American spending data sparked rate concern. The dollar extended a four-year high and Treasurys advanced.
The Standard & Poor’s 500 Index fell 0.1 percent at 4 p.m. in New York, trimming an earlier drop of 1 percent to close one point above its average price for the past 50 days. The MSCI Emerging Markets Index sank 1.5 percent as Brazilian stocks plunged 4.5 percent and Russia’s RTS Index sank 2.6 percent to enter a bear market. The yield on 10-year Treasury notes fell four basis points to 2.49 percent. The Bloomberg Dollar Spot Index rose 0.2 percent to extend a four-year high. Nickel fell for a third day and entered a bear market on record inventories.
Consumer spending in the U.S. rebounded in August as job gains encouraged households to loosen their purse strings, as the Federal Reserve assesses data to determine the timing for higher interest rates. Protesters in Hong Kong pledged to continue demonstrations unless the city’s top official steps down, while Ukraine’s army suffered its worst day of losses since a cease-fire began. A poll in Brazil showed increased support for President Dilma Rousseff’s re-election bid.
“The geopolitical situation around the world is fearsome, it’s fearful and people are worried,” Stanley Nabi, the vice chairman at Silvercrest Asset Management Group in New York, said by phone. His firm oversees about $15 billion. “Time has come for this market to consolidate and to shed some of excesses that has been built into it over the last several months.”
The S&P 500 has fallen 1.3 percent this month, paring its gain for the quarter to 0.9 percent. It has not had a decline of more than 10 percent in three years.
Swings in equities have widened at the end of the quarter, with the Dow Jones Industrial Average alternating between gains and losses of more than 100 points the previous four days. The Dow fell 42.38 points, or 0.3 percent, today.
The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX, averaged 14.5 last week, 12 percent above its mean level during the third quarter. The gauge climbed 7.3 percent to 15.94 today.
“We’re in a giant yo-yo the past six sessions but central banks are still accommodative, U.S. growth is decent, the grind higher is still in tact, we’re just hitting some bumps with macro issues,” Michael Block, chief equity strategist at New York-based Rhino Trading Partners LLC, said in a phone interview.
U.S. equities opened sharply lower as the spending data showed an advance of 0.5 percent last month after little change in July and investors weighed reports from Hong Kong.
The Fed reiterated on Sept. 17 its pledge to hold rates near zero for a considerable time after completing asset purchases next month. It also warned the timing could move forward if data continue to exceed expectations.
Concern that the Fed will raise rates in early 2015 helped send the Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, toward its biggest quarterly advance since the third quarter of 2008.
The dollar rose 0.1 percent today to 109.44 yen and touched 109.75, its highest level since August 2008. The euro gained 0.1 percent to $1.2692 per after falling earlier to $1.2664, the weakest level since November 2012.
Emerging-market stocks plunged today, with the benchmark gauge set for the steepest quarterly slump since the period ended June 2013, as tens of thousands of pro-democracy protesters poured back into the streets of Hong Kong to press demands for free and open elections.
The MSCI AC Asia Pacific Index slid 0.6 percent today after a third weekly decline. PetroChina Co. and Bank of China Ltd. sank more than 1.4 percent as the Hang Seng China Enterprises Index fell to a two-month low.
Brazilian shares retreated as much as 5.4 percent after a poll showed increased support for Rousseff. Traders are paring bets on the chances a new government will be elected next month and jump-start economic growth after the country fell into a recession in the first half of the year.
In Ukraine, the country’s army endured its deadliest day since signing a cease-fire with pro-Russian militants 3 1/2 weeks ago, straining efforts to find a lasting settlement to the six-month conflict in the nation’s east.
Russia’s Micex Index lost 1.8 percent, while the dollar- denominated RTS Index fell 2.6 percent, bringing its decline from a June high to more than 20 percent.
In Europe, concern grew that the euro-area’s expansion continued to slow. An index of executive and consumer sentiment in the region slipped to 99.9 in September from 100.6 a month earlier, the European Commission in Brussels said today. That’s the lowest since November and in line with the median of 25 forecasts in a Bloomberg News survey.
The Stoxx Europe 600 Index lost 0.4 percent, as banks in the gauge plunged 1.5 percent. HSBC and Standard Chartered Plc slid more than 1.6 percent each as they shuttered some Hong Kong branches.
The Bloomberg Commodity Index rose 1 percent as coffee and gasoline climbed at least 1.1 percent. Gasoline advanced for the fourth time in five days on concern refinery shutdowns will reduce production.
Gold futures rose 0.3 percent to $1,218.80 as the decline in global equities boosted demand for the precious metal as an alternative investment.
West Texas Intermediate rose to a two-week high on speculation stronger U.S. economic growth with boost demand for oil. WTI for November delivery added 1.1 percent to settle at $94.57 a barrel in New York.
Brent crude’s premium to WTI shrank as far as $2.56 today, the smallest since August 2013. Both WTI and Brent are headed for the biggest quarterly drop in more than two years.
Nickel entered a bear market as stockpiles reached a record, signaling ample global supplies, even as Indonesia bans its exports of the mined metal. Nickel dropped 1.8 percent to settle at $16,675 a metric ton in London. The decline was more than 20 percent lower than this year’s closing high on May 13.
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