U.S. stocks retreated for a second day as investors awaited fourth-quarter earnings reports, while European shares erased earlier gains triggered after economic confidence grew more than forecast. The yen and gold advanced.
The Standard & Poor’s 500 Index slipped 0.3% to 1,457.15 as of 4 p.m. in New York and the Stoxx Europe 600 Index closed down 0.1%, with trading volume 45% higher than the three-month average. The yen appreciated 0.8% vs. the dollar after touching a 2 1/2-year low last week. Sweden’s krona fell after the central bank said the economy is slowing. U.S. Treasuries remained higher after a $32 billion auction. Gold gained for the first time in four days.
Fourth-quarter profit at companies in the S&P 500 probably increased 2.9%, according to analyst estimates compiled by Bloomberg, which would mark the second-slowest quarterly growth since 2009.
“We’re waiting for earnings to come out,” John Manley, who helps oversee about $212 billion as chief equity strategist for Wells Fargo Advantage Funds in New York, said in a telephone interview. “Valuations are far from excessive. Yet we’ve had a strong rally very quickly. Now the market is adjusting.”
The S&P 500 retreated for a second day after reaching a five-year high last week following a budget compromise in Washington that averted most of the so-called fiscal cliff of spending cuts and tax increases.
GameStop Corp., the world’s largest video-game retailer, tumbled after the company narrowed its full-year same-store sales forecast, citing disappointing holiday results. Yum! Brands Inc., owner of the Taco Bell and KFC chains, slid after fourth-quarter same-store sales fell more than projected in China after a government probe into one of its former suppliers hurt demand.
Among European stocks, Debenhams Plc sank 7.7% after the second-largest U.K. department-store chain cut its goal for annual profit-margin growth as it stepped up discounting. Vodafone Group Plc gained 1.7% as the Wall Street Journal reported that Verizon Communications Inc. Chief Executive Officer Lowell McAdam said buying the U.K. company’s stake in their Verizon Wireless joint venture is feasible. TGS Nopec Geophysical ASA rallied 7% as the Norwegian offshore surveyor forecast 2012 revenue that exceeded analysts’ estimates.
The Stoxx 600 rose as much as 0.4% in early trading before following U.S. stocks lower. A gauge of euro-region executive and consumer sentiment rose to 87 last month, exceeding the 86.3 median of 24 estimates in a Bloomberg survey.
The yen gained against all 16 major peers. Japan’s currency has climbed more than 1% against the dollar this week after touching 88.41 on Jan. 4, the weakest level since July 2010. The yen’s 14-day relative strength index against the dollar was below the 30 level that traders view as a signal that an asset’s price has fallen too fast.
Japan’s Finance Minister Taro Aso said the government will use reserves to buy euro-denominated sovereign debt to weaken the yen, while stopping short of signaling direct euro purchases.
Sweden’s krona weakened against all its major peers, declining 0.6% against the euro. Minutes from the Riksbank’s meeting last month showed that the central bank considered cutting the benchmark rate by twice as much as it did.
“New information received since the monetary policy meeting in October indicates that the Swedish economy is slowing down more sharply than was assessed then,” minutes of the Dec. 17 meeting of Riksbank policy makers published today said.
Treasuries rose today after getting off to their worst start to a year since 2009, Bank of America Merrill Lynch indexes showed. U.S. government securities handed investors a 0.7% loss in 2013 as of yesterday. Benchmark 10-year yields decreased three basis points to 1.87% today.
The three-year notes sold in today’s auction drew a yield of 0.385%, compared with a forecast of 0.387% in a survey of five of the Federal Reserve’s 21 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 3.62, compared with an average of 3.57 for the past 10 sales.
The yield on Ireland’s five-year note fell 11 basis points to 3.22% as the nation began selling securities via banks for the first time in three years.
Bonds in Israel and the U.K. were the world’s biggest movers in developed sovereign markets today, according to Bloomberg’s Cumulative Movement Index, which measures changes in 10-year bonds, the spread between two- and 10-year debt and five-year credit default swaps relative to the average daily change in the past 90 days. Isreali bonds had a cumulative movement index of 5.2 and Britain’s was 3.1.
Silver, lead and heating oil rallied at least 1% to lead gains in 13 of 24 commodities tracked by the S&P GSCI Index, which increased 0.3%.
Gold for immediate delivery climbed 0.8% to $1,660.00 an ounce after falling 2.4% since Jan. 3. Oil in New York was little changed near $93 a barrel before Energy Department data on inventories tomorrow.
The MSCI Emerging Markets Index fell 0.6%, declining for a third day, as results from Samsung Electronics Co. and HTC Corp. disappointed some investors. South Korea’s Kospi Index slid 0.7% and Taiwan’s Taiex lost 0.4%. The Shanghai Composite Index lost 0.4% and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong sank 2.2%, the most in two months. Brazil’s Bovespa plunged 1.3%, the most since November, as power producers led declines.