Stocks Fluctuate on Economic Data; Oil Falls, Treasuries Gain

By Stephanie Borise and Stephen Kirkland

Aug. 13 (Bloomberg) -- U.S. stocks swung between gains and losses, a day after the Standard & Poor’s 500 Index dropped to the lowest level since July 21, after consumer confidence topped projections while retail sales unexpectedly fell. Oil slipped and Treasuries advanced as an inflation gauge accelerated.

The S&P 500 retreated less than 0.1 percent to 1,083.48 at 2:01 p.m. New York time after falling as much as 0.4 percent. Ten-year Treasuries extended a third weekly rally, driving yields down to 2.70 percent. Oil declined to $77.05, the lowest price in a month. Europe’s Stoxx 600 Index rose 0.3 percent, reversing a 0.7 percent drop. Spanish bonds fell and the extra yield investors demand for holding Greek debt instead of German bunds climbed to the most since May.

The confidence report helped offset speculation that U.S. retail sales are slowing, while the increase in consumer prices prompted optimism that the Federal Reserve won’t be forced to fight deflation. European equities slumped earlier as concern about sputtering growth in Greece and Spain overshadowed the fastest growth in the German economy in two decades.

“We in the market are coming to the realization, and we’re getting confirmation from the economic data, that we are having a slowdown,” said James Thorne, who oversees $2 billion as chief investment officer for equities at MTB Investment Advisors in Baltimore. “The market is guilty until proven innocent, and the charge is a double-dip recession.”

Economic Reports

Almost $2 trillion has been wiped from the value of global equities since the Fed said Aug. 10 that the pace of recovery in the world’s biggest economy will probably be “more modest” than forecast. European stocks rallied early in the day after Germany reported gross domestic product grew at the fastest pace in two decades.

Treasuries, Dollar

Ten-year note yields dropped 4 basis points, or 0.04 percentage point, to 2.70 percent. The yield was headed for a weekly drop of 10 basis points, according to Bloomberg generic data. The yield touched 2.6797 percent on Aug. 11, the lowest level since April 2009.

The Dollar Index headed for a five-day gain that would break its longest string of weekly losses since 2004 as speculation the U.S. economic recovery is faltering spurred demand for the currency’s safety.

The greenback gained against all 16 of its most-traded counterparts this week. The yen traded near a 15-year high versus the dollar amid speculation the Bank of Japan may move to cap its rally. The euro headed for a weekly loss on concern the region faces slow growth.

The yield on the 10-year German bund fell three basis points to 2.39 percent, after earlier sliding to 2.37 percent, the lowest since Bloomberg began compiling this data in 1989.

The premium investors demand to hold Greek 10-year bonds instead of German debt of similar maturity rose to 800 basis points for the first time since June 28. Spanish bond yields climbed six basis points to 4.24 percent.

Spanish banks borrowed a record 130.2 billion euros ($167.2 billion) from the European Central Bank in July as investors shun the indebted nation’s lenders.

The Thomson Reuters/Jefferies CRB Index of commodities headed for the first weekly decline in six, dragged down by oil. Crude oil futures have fallen 6.6 percent since Aug. 6, the most since the week ended July 2.

--With assistance from Elizabeth Stanton, Margot Habiby, Mark Shenk, Cordell Eddings and Catarina Saraiva in New York, Steve Stroth in Chicago and Anchalee Worrachate in London. Editors: Nick Baker.