U.S. Stocks Halt Rally as Dollar Weakens, Crude Oil Advances
- Greenback is in longest losing streak in seven months
- S&P 500 clings to gain for year after three-day rally
U.S. stocks halted a three-day advance, while the dollar had its
longest slide since April and oil capped its biggest weekly advance in
four months.
The Standard & Poor’s 500 Index slipped after a
2.9 percent surge over three days, with trading volumes 40 percent below
the 30-day average in a holiday-shortened session. The Bloomberg Dollar
Spot Index fell a fifth day, with the U.S. currency losing ground
against all its Group-of-10 peers. The MSCI Emerging Markets Index
climbed for a fourth day, the longest run in more than a month, and gold
climbed.
The
dollar has cut its annual gain to less than 9 percent against a basket
of trading currencies on bets the pace of future U.S. interest rate
increases will be slow. Falling commodity prices have depressed the
global outlook for inflation, threatening to keep consumer prices from
rising at levels targeted by central banks in Europe and America. A
rally in energy shares Wednesday spurred gains in U.S. equities and
erased the Standard & Poor’s 500 Index’s loss for the year.
“We
have a short day and people are preoccupied with other things, so
barring any unforeseen events, you’re not going to see much
movement,” said Richard Sichel, chief investment officer at Philadelphia
Trust Co., which oversees $2 billion. “Energy was getting a little
boost for a little while, and now those stocks are moving back down
again.”
Stocks
The S&P 500 fell 0.2 percent at 1 p.m. in
New York, with energy shares leading losses after the group rallied 5.6
percent in three days. The broader index is flat for the year after
capping its best week since mid-November. The U.S. stock markets closed
at 1 p.m. Thursday and will remain closed Friday.
Data today showed filings
for unemployment benefits in the U.S. decreased to a four-week low,
indicating a still-solid labor market approaching the new year.
The
Stoxx 600 was also little changed, capping a second weekly advance. The
index climbed 1.4 percent since Dec. 18 after a 2.7 percent jump on
Wednesday.
Markets in the U.K., France and the Netherlands are
among those closing early on Thursday, while Germany, Switzerland and
Italy are shut all day. Most will reopen on Dec. 28, except Britain,
whose shares will resume trading the following day.
Currencies
The
Bloomberg gauge of the dollar is on course for a 0.8 percent drop this
month, the most since June. The euro gained 0.4 percent versus the
greenback on Thursday, while the yen advanced 0.5 percent.
While
the currency has slid this month, it will strengthen against all its
Group-of-10 peers except the pound and Canadian dollar in the first
quarter, according to analysts’ forecasts.
“What’s supporting the
dollar’s outlook is the economic growth outlook for the U.S. that’s
behind monetary policy divergence,” said Masashi Murata, a vice
president at Brown Brothers Harriman & Co. in Tokyo. “The big
premise for forecasting currencies next year is the dollar’s uptrend. It
will be difficult for any G-10 currency to beat the dollar.”
A
gauge tracking 20 emerging-market currencies advanced for a fifth day.
The Russian ruble fell 1.1 percent, after rallying more than 2 percent
on Wednesday.
Emerging Markets
The MSCI Emerging Markets
Index capped the longest winning streak since Nov. 4, as energy
companies extended a rebound. Equity gauges in Thailand, Egypt and South
Africa rose at least 0.6 percent.
“It’s a relief rally due to
some year-end flows and portfolio rebalancings, helped by some signs of
stabilization in the commodity markets,” said Giorgio Bertoli, a fund
manager at Banca del Sempione in Lugano. “To sustain this advance into
the next year we need better macroeconomics data, especially in China,
and better price dynamics on commodity markets.”
The
emerging-markets index has fallen 16 percent this year, set for the
worst annual performance since 2011, and is valued at 11.2 times the
projected 12-month earnings of its members. The MSCI World Index’s
multiple is 15.9 after it dropped 2.1 percent in 2015.
Commodities
Oil in New York capped its largest weekly gain in four months as U.S. inventories declined and the number
of drilling rigs fell. Stockpiles slid 5.88 million barrels last week,
the most since June, government data showed. A 1.2 million-barrel gain
was projected in a Bloomberg survey. Gulf Coast refiners typically curb
deliveries at the end of the year to reduce local taxes. The number of
active oil rigs in the U.S. fell by 3 to 538 this week, according to
Baker Hughes Inc.
West Texas Intermediate crude futures for
February delivery increased 1.6 percent to settle at $38.10 a barrel on
the New York Mercantile Exchange.
Gold futures advanced 0.7
percent to settle at $1,075.90 an ounce as a drop in the dollar boosted
the appeal of the metal as an alternative asset. Still, gold is poised
to fall for a sixth quarter, the longest streak of declines since 1976,
according to Bloomberg data.
Bonds
U.S. 10-year Treasury
yields slipped one basis point to 2.24 percent. U.S. government
securities have returned 0.9 percent this year, based on Bloomberg World
Bond Indexes, even after the Federal Reserve raised interest rates last
week amid signs of uneven economic growth.
Trading in the Treasuries market closed at 2 p.m. New York time Thursday, while bond markets in the euro region never opened
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