U.S. stocks slip after biggest S&P 500 rally in year; Yen gains

Yen & dollar strengthen

Jobs Report

The Labor Department releases non-farm payrolls for December tomorrow. They rose by 150,000 workers last month after a 146,000 gain in November, according to the median forecast of 74 economists surveyed by Bloomberg. The unemployment rate held at 7.7 percent, the lowest since December 2008, according to economists’ estimates.

Two stocks fell for every one that rose in the Euro Stoxx 50 as Iberdrola SA, Spain’s biggest utility, slid 2.5 percent. The broader Stoxx Europe 600 Index gained 0.3 percent, extending a 22-month high, as Swiss shares rallied. The Swiss Market Index jumped 2.5 percent, with Cie. Financiere Richemont SA and Credit Suisse Group AG surging more than 4 percent, as the resumption of trading following the New Year holiday gave investors their first chance to react to the U.S. budget deal.

German unemployment increased less than economists forecast in December, the Nuremberg-based Federal Labor Agency said today.

The yen appreciated 1.1 percent against the euro and the dollar advanced 0.6 percent to $1.3111 per euro, the strongest level since Dec. 14.

The yield on 10-year U.S. Treasuries rose one basis point to 1.85 percent after rising eight basis points yesterday, the most since October. The yield on 10-year gilts rose one basis point to 2.002 percent. It’s the first time the yield has risen above 2 percent since May 10.

Flipping Coin

Predicting the consequences of a rating change by S&P or Moody’s may be little better than flipping a coin, with yields moving in the opposite direction than suggested 47 percent of the time, according to data compiled by Bloomberg in June on 314 upgrades, downgrades and outlook changes going back to 1974. Yields were measured after a month relative to U.S. Treasury debt, the global benchmark.

Treasuries have gained about 6.1 percent since S&P cut the grade of the U.S. one step to AA+ in August 2011, according to Bank of America Merrill Lynch indexes, with 10-year yields tumbling to an all-time low of 1.379 percent on July 25 last year.

Oil in New York declined 0.4 percent to $92.73 a barrel. Copper erased earlier gains, trading 0.3 percent lower after yesterday’s 3.5 percent advance, the most since Sept. 14. The London Metal Exchange index of industrial metals yesterday rallied to a three-month high on the U.S. budget agreement.

The MSCI Emerging Markets Index advanced 0.1 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.8 percent after a report showed China’s services industries expanded at the fastest pace in four months. India’s Sensex added 0.3 percent, while benchmark gauges in Poland, the Czech Republic and South Korea fell at least 0.4 percent.

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