Stocks mixed as Italian vote sparks concern
Stocks, the euro and Italian bonds reversed early gains as election projections spurred concern about prospects for a stable government in Italy. Natural gas and silver led commodities higher, while Treasuries rose.
The Standard & Poor's 500 Index was down 0.2 per cent at 1,512.32 at 1:09 p.m. in New York after gaining as much as 0.7 per cent in the first hour of trading. The Stoxx Europe 600 Index reversed gains to end 0.1 per cent lower. The euro was little changed at $US1.3190 after jumping almost 1 per cent. Italy's 10- year yields increased four basis points to 4.49 per cent after sliding as much as 28 points. Ten-year US Treasury note yields decreased three basis points to 1.93 per cent.
Italy may require another vote after partial election results suggested the four-way race may end in a divided parliament, an aide to Democratic Party candidate Pier Luigi Bersani said. Bersani, who led in opinion polls throughout the two-month race, campaigned to maintain the budget rigor of outgoing Prime Minister Mario Monti.
"We don't want to see more chaos out of Europe," Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. His firm oversees more than $US20 billion. "Any question about whether or not Italy would be committed to austerity measures after the elections gets investors concerned."
The S&P 500 last week completed its first weekly loss of the year after touching the highest level since October 2007 on Feb. 19. Investors are awaiting US data this week including the Institute for Supply Management's factory index, durable goods orders, household spending, the S&P/Case-Shiller index of home prices and fourth-quarter gross domestic product. Federal Reserve Chairman Ben S. Bernanke is due to testify before lawmakers tomorrow and the next day.
US Commerce Department data on Feb. 26 may show new-home sales climbed in January, according to a Bloomberg survey. US GDP probably expanded at a 0.5 per cent annual rate in the fourth quarter, compared with the Commerce Department's initial estimate on Jan. 30 that the economy contracted by 0.1 per cent. The data will be released on Feb. 28.
President Barack Obama's administration released a state- by-state report on how $US85 billion in automatic spending cuts will degrade programs from defense to education to public health, as White House officials said they don't expect to avert reductions scheduled to start March 1.
"Our hope is that we'll be able to come to a solution," Dan Pfeiffer, a senior Obama adviser, said in a conference call with reporters yesterday. "But there seems to be nothing the Republicans are saying right now on Sunday to suggest that by Friday they're going to change their position."
Among stocks moving today, financial and commodity shares led declines among the 10 main industry groups in the S&P 500, while telephone and utility shares rose the most. BlackBerry jumped 2.4 per cent on a report sales of the new BlackBerry 10 device are above the company's expectations. Cummins Inc. rallied 1.1 per cent after the maker of diesel engines was added to the "Conviction Buy" list at Goldman Sachs Group Inc. Bank of America Corp., Boeing Co. and Coca-Cola Co. led the Dow Jones Industrial Average lower.
The euro advanced against nine of 16 main counterparts. Sterling slipped 0.1 per cent today to 87.09 pence per euro, after depreciating to the weakest level since October 2011. Moody's Investors Service lowered Britain's credit rating on Feb. 22 by one level to Aa1 from Aaa. Chancellor of the Exchequer George Osborne said he won't give in to opposition calls to drop austerity policies after the downgrade.
Among European stocks, Deutsche Boerse AG jumped 5.6 per cent, paring a gain of as much as 12 per cent. CME Group Inc., the world's largest futures exchange, has approached the Frankfurt-based exchange to consider beginning talks on a merger, according to four people familiar with the situation.
PostNL NV rallied 6.6 per cent as the Dutch postal operator reported earnings that topped estimates. Elan Corp. surged 6.9 per cent as RP Management LLC, an investor in royalty streams from pharmaceuticals, said it's willing to buy the Irish drugmaker for about $US6.5 billion.
Reckitt Benckiser Group Plc slid 3 per cent, the most in nine months, as US regulators approved two rival generic versions of its Suboxone heroin-dependency treatment.
The yen weakened against 11 of 16 major peers and was little changed versus the euro after earlier tumbling as much as 1.7 per cent. Japan's currency has dropped about 7 per cent this year, the biggest loser among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The pound has seen the second-biggest decline, falling 6 per cent.
Speculation grew that Japanese Prime Minister Shinzo Abe will nominate a central bank chief who favors stimulus. Abe is likely to call on Asian Development Bank President Haruhiko Kuroda, who said this month there is "substantial room" for easing, according to two officials with knowledge of the discussions.
"The market seems to have formed an opinion that Kuroda is a dove and if he indeed becomes the new BOJ governor, he would be willing to do much more to support growth," said Geoffrey Yu, a senior currency strategist at UBS AG in London. "The yen is weakening on speculation that there will be more policy easing."
The S&P GSCI gauge of 24 commodities gained 0.2 per cent, rebounding after last week's 2.6 per cent drop, the biggest in 11 weeks. Silver for immediate delivery gained 1.1 per cent to gain for a third day, the longest streak in a month. Copper added 0.3 per cent.
US crude oil futures climbed 0.2 per cent to $US93.29 per barrel as Iran prepares to meet the US, China, France, Germany, Russia and the U.K. in Kazakhstan tomorrow to discuss its nuclear program. U.K. natural gas for next-day delivery reached 77 pence a therm, the most in more than a year, as demand rose on colder-than-average weather. US natural gas jumped 3.5 per cent.
The MSCI Emerging Markets Index rose 0.2 per cent. The Shanghai Composite Index advanced 0.5 per cent, while South Korea's Kospi Index and Taiwan's Taiex Index both slipped 0.5 per cent. Russia's Micex Index climbed 0.5 per cent and India's Sensex added less than 0.1 per cent. Benchmark gauges advanced at least 0.7 per cent in Turkey, Poland, the Czech Republic, Indonesia and the Philippines.
The shekel remained lower versus the dollar, weakening 0.6 per cent, as the Bank of Israel kept its benchmark interest rate unchanged at its lowest in more than two years as rising house prices balanced slowing growth and inflation. Governor Stanley Fischer and the monetary policy panel held the rate at 1.75 per cent. Ten of the 22 economists surveyed by Bloomberg forecast the decision, while the remainder predicted a quarter-point reduction.