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U.S. stocks fell for a fifth day, the longest slump since September, as lawmakers prepared for talks to avoid the fiscal cliff of spending cuts and tax increases looming in January. Treasuries extended a weekly gain.
The Standard & Poor’s 500 Index lost 0.8 percent as of 10:13 a.m. in New York, erasing its gain for December and trimming its yearly advance to 12 percent. Ten-year Treasury yields fell four basis points to 1.7 percent and the cost of insuring against a corporate default in Europe increased to a three-week high. Italian 10-year bonds reversed losses as demand increased at an auction of government debt.
U.S. congressional leaders plan to meet with President Barack Obama today and House Republicans said they will convene Dec. 30 as lawmakers seek to avoid the more than $600 billion in tax-and-spending changes.
“What the markets fear most is that we’re in this paralysis where the government is unable to govern, communicate and compromise,” Greg Peterson, director of investment research at Ballentine Partners LLC in Waltham, Massachusetts, which manages about $4.2 billion in assets, said by telephone. “There’s still hope in our minds that they can get something done but if they go off the cliff, it’s going to be serious.”
Weekly Decline
S&P 500 futures erased earlier gains before the open of exchanges in New York. The index is poised for a 0.8 percent weekly decline and today’s drop erased its advance for December.
Obama will meet at 3 p.m. Washington time with Republican House Speaker John Boehner and Senate Minority Leader Mitch McConnell, along with Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, both Democrats. The president who had been negotiating one-on-one with Boehner.
Energy companies led losses among the 10 main industry groups in the S&P 500, with Valero Energy Corp. and Peabody Energy Corp. sliding about 2 percent each.
Home Depot Inc. and Lowe’s Cos. fell at least 0.9 percent. A U.S. dockworkers’ strike threatens possible port closings that could cut off shipments right before the lucrative gardening season. Teekay Tankers Ltd. paced losses in shipping firms.
Benchmark U.S. 10-year Treasuries are heading for the first weekly gain in a month. The securities lagged behind stocks this year by the most since 2009, with equities returning eight times more than bonds.
An S&P gauge of homebuilders lost 0.9 percent even after better-than-forecast growth in home sales. The index of pending home sales climbed 1.7 percent to 106.4, the highest reading since April 2010, after a revised 5 percent gain in October, the National Association of Realtors reported today in Washington. The median forecast in a Bloomberg survey called for a 1 percent advance.
The MNI Chicago Report’s business barometer rose to 51.6 in December from 50.4 the prior month, above the reading of 50 that is the dividing line between expansion and contraction and higher than the median estimate of economists for 51.
The Stoxx 600’s decline trimmed its 2012 advance to 14 percent, the largest annual increase since 2009. The number of shares changing hands today was 27 percent less than the 30-day average, according to data compiled by Bloomberg.
Bankia SA plunged 23 percent to the lowest price since its initial share sale in July 2011 as the bank was temporarily excluded from Spain’s benchmark IBEX 35. Porsche SE surged 6.3 percent to the highest in almost two years after an appeals court ruling dismissed a lawsuit by hedge funds that accused the German carmaker of concealing a plan to corner the market in Volkswagen AG shares.
The MSCI Asia Pacific Index advanced 0.6 percent. Government reports today showed Japan’s industrial output slid 1.7 percent last month from October, worse than all 27 estimates in a Bloomberg News survey that had a median forecast of a 0.5 percent decline. The data bolstered the case for Prime Minister Shinzo Abe to push for further monetary easing. Consumer prices excluding fresh food fell 0.1 percent in November from a year earlier.
Abe’s cabinet is working on a plan to fight against a strong yen, the Nikkei newspaper said. Proposals include the use of currency intervention when needed, the paper said.
The cost of insuring against a corporate default increased in Europe. The Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated companies rose 12 basis points, paring its first annual rally since 2009.
The yield on Italian 10-year bonds was little changed at 4.53 percent as the country sold 5.9 billion euros ($7.8 billion) of five- and 10-year government securities. Investors bid for 1.47 times the amount of the 10-year debt offered, up from 1.18 times on Nov. 29. The yield had earlier increased as much as 4 basis points.
The MSCI Emerging Markets Index advanced 0.5 percent to extend this year’s increase to 15 percent. China’s Shanghai Composite Index rallied 1.2 percent to the highest since June 21. The BSE India Sensitive Index added 0.6 percent, heading for its best year since 2009. Vietnam’s VN Index jumped to the highest since August, capping its largest weekly gain since February. Russia’s Micex Index fell 0.2 percent.
