Tags: stocks | dollar | market | oil

Stocks Decline Amid Price Data as Oil Tumbles to 2-Year Low

Wednesday, 22 October 2014 05:06 PM

U.S. stocks dropped, halting a four-day rally, while the dollar advanced as the cost of living in America unexpectedly rose. Oil sank to a two-year low after an inventory report and gold fell the most in two weeks.

The Standard & Poor’s 500 Index lost 0.7 percent at 4 p.m. in New York after its biggest rally in a year yesterday. Boeing Co. plunged 4.5 percent to drag the Dow Jones Industrial Average lower. The Stoxx Europe 600 Index rose 0.7 percent to cap its best two-day rally in 15 months. The Bloomberg Dollar Spot Index rose 0.3 percent. Gold slid 0.5 percent to settle at $1,245.50 an ounce, while crude lost 2.4 percent.

The S&P 500 surged 2 percent yesterday to cap a 4.2 percent rally over four days. The U.S. consumer price index added 0.1 percent in September. West Texas Intermediate crude sank after an Energy Information Administration report showed inventories increased more than forecast last week. Canada’s Parliament has been locked down after a gunman was shot by police in the national legislature.

“The market is driven primarily by trader and investor emotion and sentiment,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “All that’s going to remain consistent in the short term is that volatility is going to continue and that you’re going to have significant swings just based on trader sentiment, without any specific data points.”

The S&P 500 climbed as much as 0.4 percent today before retreating in afternoon trading. The Chicago Board Options Volatility Index advanced 14 percent to 18.26 today. The VIX had plunged 39 percent in the previous four days. Small cap shares led losses among U.S. equities, as the Russell 2000 Index dropped 1.4 percent.

Canada Stocks

Canadian stocks tumbled 1.6 percent, the most since June 2013, for the first retreat in five days, as the downtown core in Ottawa remained in lockdown as police investigate “multiple suspects” and the central bank said the economy won’t reach full output until the second half of 2016. Energy and materials producers led declines as oil and metals prices tumbled.

The S&P 500 had extended its advance this week amid better- than-estimated corporate earnings and speculation the European Central Bank would boost stimulus. Concern that a slowdown in global growth would hurt the world’s largest economy just as the Fed winds down its bond purchases had erased as much as $2.1 trillion in U.S. equity values.

“If anything the shootings are a short-term excuse to sell,” James W. Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.9 billion, said by phone. “We’ve had a really, really sharp rally lately. We’re up just under 7 percent from the trading low on Oct. 15. That’s a sharp rally in a short period of time and this could be some short-term profit-taking.”

Earnings Reports

Energy producers sank 1.7 percent to lead declines among eight of the 10 main S&P 500 groups today. Industrial shares lost 1.3 percent, while utility stocks climbed 0.6 percent for the best performance.

Investors also watched corporate reports today. About 79 percent of S&P 500 companies that have posted quarterly earnings this season have topped analysts’ estimates for profit, while 63 percent beat sales projections, data compiled by Bloomberg show.

Yahoo! Inc. rallied 4.5 percent and Broadcom Corp. jumped 5.5 percent after reporting sales that beat forecasts. Biogen Idec Inc., the world’s biggest maker of multiple sclerosis treatments, slid 5.4 percent as sales of its top drug, Tecfidera, missed analyst estimates.

Boeing Slide

Boeing fell the most in Dow average as investors signaled concern that the world’s largest planemaker isn’t moving fast enough to curb costs on the 787 Dreamliner.

“Right now, we’re looking at earnings being the driving force of this market,” Randy Bateman, the chief investment officer of Huntington Asset Advisors, which manages about $3.5 billion, said by phone. “There will be winners and losers.”

BlackRock Inc. Chief Executive Officer Laurence D. Fink said yesterday the selloff last week in U.S. equity markets “weeded out the excesses,” making stocks a good investment for those who aren’t going to sell their positions soon.

“As a long-term investor, yes, I’d be buying equities,” Fink.. “This is just a market correction, and we need market corrections to clean the market out.”

Hedge Funds

His remarks were echoed by billionaire hedge-fund managers Dan Loeb. Loeb, who runs Third Point LLC, told investors in a letter yesterday that “going forward, we expect that the U.S. will remain the best place to invest” and that “markets will resume an overall upward trajectory in the U.S. through year- end.”

European stocks advanced for a second day as stimulus bets outweighed some corporate earnings that missed estimates. The benchmark measure rallied 2.1 percent yesterday as the European Central Bank was said to buy covered bonds and Reuters reported that the central bank is considering corporate-debt purchases.

The ECB bought Spanish covered bonds in a third day of asset purchases today, according to people familiar with the matter. It added to French and Portuguese securities it bought this week, said the people, who asked not to be identified as they’re not authorized to talk about it. The central bank will reveal the amount of debt purchased on Oct. 27.

“The ECB buying bonds is just speculation, but investors are thinking there’s no smoke without fire, so the sentiment is better,” said Christian Stocker, a strategist at UniCredit Bank AG in Munich.

Europe Stocks

Among stocks moving today, ABB Ltd. rose 2.5 percent after reporting third-quarter profit that exceeded analysts’ estimates. GlaxoSmithKline Plc advanced 3.5 percent after posting better-than-forecast profit. British American Tobacco Plc helped push a gauge of personal and household-goods stocks lower after saying cigarette shipments fell further in the first nine months of the year.

Greece’s 10-year yield fell 35 basis points to 7.36 percent and Portugal’s rate slid nine basis points to 3.31 percent.

Treasuries reversed gains after the price report before trading little changed. Bonds have stabilized after concerns that Europe may tip into recession drove 10-year yields down to 1.86 percent last week, the lowest level in since May 2013.

The Bloomberg Dollar Spot Index, which measures the greenback against a basket of 10 major counterparts, rose 0.2 percent. The gauge lost 1.4 percent in the past two weeks as traders pushed back expectations for interest-rate increases.

Emerging Markets

The euro fell 0.6 percent to $1.2647 after earlier gaining as much as 0.2 percent. It slid 0.7 percent yesterday, the biggest decline since Oct. 14. The yen decreased 0.2 percent to 107.18 per dollar, posting a five-day drop for the first time since Sept. 12.

The MSCI Emerging Markets Index rose 0.4 percent for a fourth day of gains, heading for the longest streak in almost two months. Benchmark gauges in Hong Kong, South Korea and Taiwan climbed more than 1 percent.

The Bloomberg Commodity Index dropped 0.7 percent after rallying 0.7 percent yesterday. Coffee futures lost 4.3 percent and silver sank 2.1 percent.

WTI crude for December delivery fell 2.4 percent to $80.52 a barrel, the lowest settlement for front-month futures since June 28, 2012, after the report showing stockpiles climbed 7.11 million barrels in the week ended Oct. 17. Analysts surveyed by Bloomberg had expected a gain of 3 million.

Zinc prices rose the most in two months as inventories dropped to the lowest since August. The metal for delivery in three months climbed 2.2 percent to settle at $2,259.50 a ton in London, the biggest gain since Aug. 20. Yesterday, the metal touched $2,166, the lowest since June 25.

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U.S. stocks dropped, halting a four-day rally, while the dollar advanced as the cost of living in America unexpectedly rose. Oil sank to a two-year low after an inventory report and gold fell the most in two weeks.
stocks, dollar, market, oil
Wednesday, 22 October 2014 05:06 PM
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