U.S. stocks erased early losses and commodities pared declines as House Speaker John Boehner said he is optimistic lawmakers engaged in budget talks can “avert this crisis sooner rather than later.”
The Standard & Poor’s 500 Index was up less than 0.1 percent as of 11:25 a.m. in New York after earlier slumping as much as 1 percent. The S&P GSCI gauge of 24 raw materials was down 0.7 percent, trimming an earlier decline in half as oil pared losses following a report that showed an unexpected decline in U.S. supplies. Ten-year Treasury rates slipped less than two basis points to 1.62 percent and the Dollar Index reversed an earlier advance.
Equities reversed declines as Republican Representative Boehner made his remarks to reporters, while saying he continues to oppose the expiration of tax cuts for top earners and Democrats need to get “serious” on budget cuts. Obama will meet with business leaders today and have lunch with election opponent Mitt Romney tomorrow as lawmakers debate ways to avert $607 billion in tax increases and spending cuts that will kick in next year if a deal isn’t reached.
“The market is at the mercy of the fiscal cliff until we get some sort of resolution,” Liz Ann Sonders, the New York- based chief investment strategist at Charles Schwab Corp., which has $1.9 trillion in client assets, said in a telephone interview.
The S&P 500 fell on the first two days of the week after optimism that a budget deal will be made sent the index up 3.6 percent last week, its biggest gain since June.
Equities extended losses earlier after Commerce Department data showed purchases of new U.S. homes unexpectedly declined 0.3 percent to a 368,000 annual pace in October, showing limited progress in the housing market recovery.
The Stoxx Europe 600 Index rose 0.1 percent, trimming an earlier loss of as much as 0.6 percent. Swiss Life Holding AG, Switzerland’s biggest life insurer, slid 1.7 percent after saying it will write down the value of its German brokerage AWD Holding AG by 576 million francs ($618 million), hurting full- year profit.
OAO MegaFon, Russia’s second-largest mobile-phone operator, dropped 2 percent on its debut in London after raising $1.7 billion in the biggest initial offering by a Russian company in three years. Raiffeisen Bank International AG, eastern Europe’s second-biggest lender, sank 4.6 percent in Vienna as third- quarter profit missed analysts’ estimates.
The yield on 10-year Treasuries fell for a third day. Volatility in U.S. government debt dropped to the lowest in five years yesterday, according to Bank of America Merrill Lynch’s MOVE index.
“The U.S. budget issue is posing the biggest uncertainty to the market now given that some data in the world’s largest economy have been showing signs of recovery,” said Kim Dae Young, a Seoul-based fund manager at KB Asset Management Co., which manages about $27 billion in assets.