U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a second day, while the dollar erased losses and gold slid from a record as a drop in jobless claims caused investors to question whether the Federal Reserve will pursue further economic stimulus measures.
The S&P 500 decreased 0.2 percent to 1,158.06 at 4 p.m. in New York. The Dollar Index, which gauges the U.S. currency against six major peers, advanced 0.1 percent after slumping as much as 0.6 percent to an almost nine-month low. Gold futures slipped the most since July, losing 0.9 percent to $1,335 an ounce after earlier rallying to as high as $1,366. Oil sank 1.9 percent from a five-month high to $81.67 a barrel.
U.S. jobless claims fell last week to the lowest in three months, the Labor Department said, tempering concern that the labor market is deteriorating a day before government data forecast to show the unemployment rate rose last month. The jobs data may influence the Fed’s decision about undertaking another round of debt purchases, a tactic known as quantitative easing.
“The market’s looking for a Fed sign of a second round of quantitative easing,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees more than $85 billion. “Stronger economic reports suggest the Fed may be less aggressive and hold back in the face of an improving economy. Negative reports would promote that idea.”
‘Legitimate Debate’
For $2 trillion, the Fed may buy little improvement in growth, employment or inflation over the next two years. Firms with large-scale models of the U.S. economy such as IHS Global Insight, Moody’s Analytics Inc. and Macroeconomic Advisers LLC project only a moderate impact from additional Fed asset purchases. The firms estimate that the unemployment rate will remain around 9 percent or higher next year whether the Fed buys $500 billion or $2 trillion of U.S. Treasuries.
Fed Bank of Dallas President Richard Fisher repeated doubts that more monetary easing will spur employment and said policy makers haven’t settled a debate over whether to take new steps.
“There is a great deal of legitimate debate still to take place within the FOMC on the subject of quantitative easing, and the pros and cons and costs and benefits of further monetary accommodation,” Fisher said in the text of a speech today in Minneapolis, referring to the policy-setting Federal Open Market Committee.
The S&P 500, which climbed to the highest level since May on Oct. 5, added to yesterday’s 0.1 percent decline. Food and beverage and energy shares were the biggest drag on the index, with PepsiCo Inc. and Chevron Corp. pacing losses. Adobe Systems Inc. surged 12 percent, leading technology shares higher, after the New York Times reported that Microsoft Corp. Chief Executive Officer Steve A. Ballmer discussed buying the maker of graphics software.
Jobless Claims
Initial jobless claims dropped by 11,000 to 445,000 in the week ended Oct. 2, the fewest since July 10. Economists projected 455,000 new claims last week, according to the median forecast in a Bloomberg survey. The September jobs report, set for tomorrow, is forecast to show a rise in the unemployment rate for a second month, to 9.7 percent, according to a Bloomberg survey.
Alcoa Inc., the biggest U.S. aluminum producer, reported third-quarter profit excluding certain items of 9 cents a share. Analysts projected Alcoa, the first in the Dow Jones Industrial Average to report earnings for the June-September period, would earn 5 cents a share. The stock slipped 1.4 percent before the results were released.
U.S. two-year Treasury yields trimmed losses after falling to as low as 0.351 percent, a record. The 10-year yield was little changed at 2.39 percent, near the lowest since January 2009.
Euro Reverses Gain
The euro weakened 0.2 percent to $1.3909 after earlier topping $1.40 for the first time in eight months and extending its gain over the past month to 10 percent. The yen pared gains to trade at 82.38 per dollar after reaching 82.11, its strongest level since 1995, amid speculation the Bank of Japan will resist seeking to curb its gains.
European Central Bank President Jean-Claude Trichet said he opposes “disorderly” currency moves before a Group of Seven summit likely to be dominated by discussions about exchange rates. The ECB held its key rate steady today and the Bank of England kept its benchmark interest rate and debt-buying program unchanged.
Countries around the world are taking measures to devalue currencies and loosen monetary policy to safeguard export-led growth. Thailand may do more to relax limits on money outflows, Prime MinisterAbhisit Vejjajiva said yesterday in an interview in New York.
‘Currency Wars’
Chinese Premier Wen Jiabao said in Brussels yesterday his country will stick to gradually increasing the yuan’s flexibility, criticizing Europe and the U.S. for pressuring for a revaluation.
“There’s a lot of concern that currency wars are going to escalate,” said Noman Ali, who manages $3 billion of U.S. stocks at MFC Global Investment Management in Toronto. “Everybody is looking at export markets to rescue growth, and the best way to do it is to devalue the currency. But if everybody starts devaluing their currency that mechanism fails.”
European stocks closed little changed. Volvo AB fell 5.3 percent in Stockholm and Renault SA surged 8.5 percent in Paris as France’s second-largest carmaker sold a 14.9 percent stake in the Swedish truckmaker. Kazakhmys Plc, Kazakhstan’s biggest copper company, retreated 5.6 percent as an investor sold shares. Man Group Plc, Actelion Ltd. and Demag Cranes AG soared more than 5 percent amid takeover speculation.
German 10-year bonds declined, sending the yield up 4 basis points to 2.26 percent.
Spain’s 10-year yield rose 3 basis points to 4.01 percent after the nation sold 3.22 billion euros ($4.5 billion) of three-year notes at an average yield of 2.527 percent, compared with a yield of 2.276 percent when the notes were last auctioned on Aug. 5. The government aimed to sell a maximum of 4 billion euros. France sold about 8.5 billion euros of bonds maturing in 2020, 2026 and 2029. France’s 10-year yield increased 6 basis points to 2.63 percent.
To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
http://jodnet.blogspot.com
U.S. jobless claims fell last week to the lowest in three months, the Labor Department said, tempering concern that the labor market is deteriorating a day before government data forecast to show the unemployment rate rose last month. The jobs data may influence the Fed’s decision about undertaking another round of debt purchases, a tactic known as quantitative easing.
“The market’s looking for a Fed sign of a second round of quantitative easing,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees more than $85 billion. “Stronger economic reports suggest the Fed may be less aggressive and hold back in the face of an improving economy. Negative reports would promote that idea.”
‘Legitimate Debate’
For $2 trillion, the Fed may buy little improvement in growth, employment or inflation over the next two years. Firms with large-scale models of the U.S. economy such as IHS Global Insight, Moody’s Analytics Inc. and Macroeconomic Advisers LLC project only a moderate impact from additional Fed asset purchases. The firms estimate that the unemployment rate will remain around 9 percent or higher next year whether the Fed buys $500 billion or $2 trillion of U.S. Treasuries.
Fed Bank of Dallas President Richard Fisher repeated doubts that more monetary easing will spur employment and said policy makers haven’t settled a debate over whether to take new steps.
“There is a great deal of legitimate debate still to take place within the FOMC on the subject of quantitative easing, and the pros and cons and costs and benefits of further monetary accommodation,” Fisher said in the text of a speech today in Minneapolis, referring to the policy-setting Federal Open Market Committee.
The S&P 500, which climbed to the highest level since May on Oct. 5, added to yesterday’s 0.1 percent decline. Food and beverage and energy shares were the biggest drag on the index, with PepsiCo Inc. and Chevron Corp. pacing losses. Adobe Systems Inc. surged 12 percent, leading technology shares higher, after the New York Times reported that Microsoft Corp. Chief Executive Officer Steve A. Ballmer discussed buying the maker of graphics software.
Jobless Claims
Initial jobless claims dropped by 11,000 to 445,000 in the week ended Oct. 2, the fewest since July 10. Economists projected 455,000 new claims last week, according to the median forecast in a Bloomberg survey. The September jobs report, set for tomorrow, is forecast to show a rise in the unemployment rate for a second month, to 9.7 percent, according to a Bloomberg survey.
Alcoa Inc., the biggest U.S. aluminum producer, reported third-quarter profit excluding certain items of 9 cents a share. Analysts projected Alcoa, the first in the Dow Jones Industrial Average to report earnings for the June-September period, would earn 5 cents a share. The stock slipped 1.4 percent before the results were released.
U.S. two-year Treasury yields trimmed losses after falling to as low as 0.351 percent, a record. The 10-year yield was little changed at 2.39 percent, near the lowest since January 2009.
Euro Reverses Gain
The euro weakened 0.2 percent to $1.3909 after earlier topping $1.40 for the first time in eight months and extending its gain over the past month to 10 percent. The yen pared gains to trade at 82.38 per dollar after reaching 82.11, its strongest level since 1995, amid speculation the Bank of Japan will resist seeking to curb its gains.
European Central Bank President Jean-Claude Trichet said he opposes “disorderly” currency moves before a Group of Seven summit likely to be dominated by discussions about exchange rates. The ECB held its key rate steady today and the Bank of England kept its benchmark interest rate and debt-buying program unchanged.
Countries around the world are taking measures to devalue currencies and loosen monetary policy to safeguard export-led growth. Thailand may do more to relax limits on money outflows, Prime MinisterAbhisit Vejjajiva said yesterday in an interview in New York.
‘Currency Wars’
Chinese Premier Wen Jiabao said in Brussels yesterday his country will stick to gradually increasing the yuan’s flexibility, criticizing Europe and the U.S. for pressuring for a revaluation.
“There’s a lot of concern that currency wars are going to escalate,” said Noman Ali, who manages $3 billion of U.S. stocks at MFC Global Investment Management in Toronto. “Everybody is looking at export markets to rescue growth, and the best way to do it is to devalue the currency. But if everybody starts devaluing their currency that mechanism fails.”
European stocks closed little changed. Volvo AB fell 5.3 percent in Stockholm and Renault SA surged 8.5 percent in Paris as France’s second-largest carmaker sold a 14.9 percent stake in the Swedish truckmaker. Kazakhmys Plc, Kazakhstan’s biggest copper company, retreated 5.6 percent as an investor sold shares. Man Group Plc, Actelion Ltd. and Demag Cranes AG soared more than 5 percent amid takeover speculation.
German 10-year bonds declined, sending the yield up 4 basis points to 2.26 percent.
Spain’s 10-year yield rose 3 basis points to 4.01 percent after the nation sold 3.22 billion euros ($4.5 billion) of three-year notes at an average yield of 2.527 percent, compared with a yield of 2.276 percent when the notes were last auctioned on Aug. 5. The government aimed to sell a maximum of 4 billion euros. France sold about 8.5 billion euros of bonds maturing in 2020, 2026 and 2029. France’s 10-year yield increased 6 basis points to 2.63 percent.
To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
http://jodnet.blogspot.com
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