Stocks, Oil Retreat on Economy; Dollar Slips Versus Yen
By Stephen Kirkland and Rita Nazareth
July 28 (Bloomberg) -- U.S. stocks fell, Europe’s benchmark equity index halted a six-day rally and the dollar declined versus the yen as an unexpected drop in American durable-goods orders deepened concern the economic recovery is slowing.
The Standard & Poor’s 500 Index lost 0.5 percent to 1,108.7 at 11:25 a.m. in New York. The Stoxx Europe 600 Index slipped 0.4 percent. Oil fell below $77 a barrel, extending losses as government data showed an unexpected gain in U.S. inventories, and the dollar slid from the highest in almost two weeks versus the yen. Copper rose to an 11-week high on signs growth is sufficient in China and the U.S. to spur demand.
Orders for U.S. goods meant to last at least three years dropped 1 percent in June, depressed by a less demand for aircraft, Commerce Department figures showed. The data, which followed a bigger-than-forecast drop in consumer confidence yesterday, adds to evidence that the economic recovery is slowing even as improving corporate earnings trigger an 8.5 percent rebound in the S&P 500 from a 10-month low on July 2.
“The scars remain,” said David Rosenberg, chief economist at Gluskin Sheff & Associates Inc. in Toronto, in a radio interview with Tom Keene on Bloomberg Surveillance. “The transition to the next sustainable economic expansion is usually between five and seven years. The good news is that we finished two years of this. The glass is half empty. There could be between three to five years to go.”
Dow Rally Halted
The Dow Jones Industrial Average snapped a four-day streak of gains as Boeing Co. led declines after posting second-quarter sales that fell 9.2 percent to $15.6 billion, trailing analysts’ estimates.
Earnings have topped analysts’ projections at about 81 percent of companies in the S&P 500 that have reported results since July 12 and per-share profit has grown 54 percent, according to data compiled by Bloomberg. Sales have increased 9.2 percent and topped estimates at 66 percent of the 218 companies.
Investors were also awaiting the release of the U.S. Federal Reserve’s Beige Book business survey later today for clues about the economic outlook. The survey is scheduled for release at 2 p.m.
Crude oil for September delivery tumbled 1.4 percent to $76.40 a barrel on the New York Mercantile Exchange after the Energy Department’s inventory report showed supplies surged by 7.31 million barrels to 360.8 million in the week ended July 23.
Copper Rallies
Copper for September delivery climbed 1.6 percent to $3.257 a pound in New York, the highest price since mid-May, and lead and zinc jumped more than 1.6 percent in London.
The gains in industrial metals came after the Shanghai Composite Index of equities jumped 2.3 percent to a two-month high as the central bank said China’s economic fundamentals are “good” and the U.S. Commerce Department’s durable-goods report showed that orders and shipments for nonmilitary capital goods excluding aircraft climbed 0.6 percent in June.
The 10-year Treasury yield was 1 basis point lower at 3.04 percent. The yield on five-year notes slipped 3 basis points to 1.76 percent before a sale of $37 billion of the debt today.
A benchmark indicator of corporate credit risk in the U.S. held near the lowest level in two months. Credit-default swaps on the Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 1.1 basis point to a mid-price of 103.6 basis points, according to index administrator Markit Group Ltd.
More than two stocks fell for every one that advanced in Europe’s Stoxx 600. Yell Group Plc slumped 15 percent after the publisher posted a drop in profit. Nexans SA lost 8.2 percent after the world’s biggest maker of cables and wires reported narrowing first-half margins. Safran SA and Infineon Technologies AG climbed more than 2 percent after the companies raised their earnings outlooks.
Japan’s Nikkei-225 Stock Average posted the biggest jump among major global equity indexes, rising 2.7 percent, after Tokyo-based Canon Inc., the world’s largest camera maker, reported earnings that beat analysts’ estimates.
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