U.S. Stocks Fluctuate on Retail Sales, Confidence Data

By Stephanie Borise and Stephen Kirkland -

Gold climbed to a four-week high and palladium, used in auto catalysts to remove harmful car exhausts, rose for a second day. Photographer: Jean Chung/Bloomberg

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Aug. 13 (Bloomberg) -- Keith Wirtz, chief investment officer at Fifth Third Asset Management Inc., talks about the outlook for the U.S. equity market. Wirtz speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

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Aug. 13 (Bloomberg) -- Paul Miller, managing director at FBR Capital Markets, talks about the outlook for banking stocks, including Bank of America Corp. and PNC Financial Services Group Inc. Miller speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

U.S. stocks swung between gains and losses, a day after the Standard & Poor’s 500 Index slipped to the lowest level since July 21, after consumer confidence beat estimates while a gauge of retail sales unexpectedly decreased. Treasuries rallied as consumer prices climbed.

The S&P 500 rose 0.1 percent to 1,084.68 at 10:04 a.m. in New York, after earlier losing as much as 0.3 percent. The Stoxx Europe 600 Index rose 0.4 percent. Benchmark 10-year notes were headed for a third weekly rally after the Federal Reserve said on Aug. 10 that it will revive purchases of U.S. debt to help spur the economy. The dollar erased losses against the yen after U.S. consumer prices rose more than forecast in July, easing concern the economy will slide into deflation.

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. Equities slumped earlier as concern about sputtering growth in Greece and Spain overshadowed the fastest growth in the German economy in two decades.

“I don’t see anything in the economic data that would suggest that we’re slowing further,” said Eric Green, director of research at Penn Capital Management in Philadelphia, which oversees $5 billion.

Economic Reports

The consumer-price index increased 0.3 percent, the most in a year and exceeding the 0.2 percent gain projected by the median forecast of economists surveyed by Bloomberg News, according to figures from the Labor Department. A separate report from the Commerce Department today showed retail sales rose 0.4 percent in July, less than predicted, suggesting that a lack of jobs is prompting Americans to cut spending.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 69.6 following a reading of 67.8 in July that was the lowest since November, the group said today. The gauge was forecast to rise to 69, according to the median of 65 economists in a Bloomberg News survey.

The 10-year note yield dropped 3 basis points, or 0.03 percentage point, to 2.72 percent. The yield was headed for a weekly drop of 10 basis points, according to Bloomberg generic data. The two-year note yield slid to a record low 0.4892 percent on Aug. 11.

Spanish Borrowing

Spanish banks borrowed a record 130.2 billion euros ($167.2 billion) from the European Central Bank in July as investors shun the debt-ridden nation’s lenders. Almost $2 trillion has been wiped from the value of global equities since the Fed said the pace of recovery in the world’s biggest economy will probably be “more modest” than forecast. European stocks rallied earlier after Germany reported gross domestic product grew at the fastest pace in two decades.

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 7 basis points to 4.28 percent. Spain’s borrowing rose 3.1 percent from 126.3 billion euros in June, according to daily averages compiled by the Bank of Spain. The yield on Italy’s 10-year government bonds rose 3 basis points to 3.86 percent as the government sale of 2015 and 2025 debt.