Stocks, commodities slide as dollar gains on Fed’s easing debate

Housing Data

An S&P gauge of homebuilders tumbled. Work began on 613,000 one-family houses at an annual rate last month, the most since July 2008 and up 0.8% from December’s 608,000, Commerce Department figures showed today. Total housing starts dropped to a 890,000 rate, less than forecast and restrained by a slump in construction of multifamily units.

Hedge-fund manager David Einhorn said he reduced bets that stocks will rise as equities climbed to a five-year high while U.S. economic growth halted. U.S. gross domestic product shrank at a 0.1% annual rate in the fourth quarter, the first decline since 2009, as a plunge in defense spending swamped gains for consumers.

“As the market continues to advance, even as the economy doesn’t, we tend to become less enthusiastic,” Einhorn said on a conference call today held by his Greenlight Capital Re Ltd. reinsurer. “We took some gains in our long portfolio and added to our shorts.”

Sixteen of the 24 commodities tracked by the S&P GSCI Index retreated, sending the gauge down 1.2% in its biggest loss on a closing basis since November. Gold futures sank 1.6% to $1,578 an ounce, the lowest since June, and retreated for a fifth session in the longest slump since December 2011.

Metals and oil extended earlier losses triggered by speculation a struggling hedge fund was selling position.

“There is a rumor that a fund is blowing up,” Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania, said in a telephone interview. Schork has spent 17 years in physical commodity and derivatives trading including stints at Glencore Ltd. and Novarco Ltd., Marc Rich’s last venture in the global energy trading, and his clients include OPEC and major oil companies. “Metals are getting hit and it’s spreading over to oil.”

Treasuries, Europe

Treasury 10-year note yields rose fell two basis points to 2.01%, retreating from near the highest level in 10 months. The dollar was stronger against 14 of 16 major peers.

About three shares gained for every two that fell in the Stoxx Europe 600 Index, even as the gauge retreated 0.3%. Lafarge SA rallied 5.5% in Paris as earnings beat estimates and the world’s biggest cement maker said it’ll meet most of a cost-cutting goal one year early.

RSA Insurance Group Plc sank 14% for the largest drop since 2004 as the U.K.’s biggest non-life insurer by market value cut its dividend by 33%. Deutsche Lufthansa AG declined 6.2% as the German carrier suspended its dividend for the first time since 2010.

Germany’s 10-year bunds declined for the first time in three days, sending yields up three basis points to 1.65%, as demand fell at a 5 billion-euro ($6.69 billion) auction of the euro-region’s benchmark securities. Portugal’s debt rose, sending 10-year yields down two basis points to 6.19%, after the nation sold 1.5 billion euros of three- and 12-month bills.

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