U.S. equities fell, halting a two- day gain for the Standard & Poor’s 500 Index, as energy shares led losses amid a plunge in natural gas and a report showed a drop in pending home sales. Treasuries retreated before the Federal Reserve meets to discuss tapering its bond purchases.
The S&P 500 lost 0.3% to 1,686.15 at 3:23 p.m. in New York to pare its July rally to less than 5%, poised for its sixth monthly gain of the year. Ten-year Treasury yields increased 2.5 basis points to 2.59%. Natural gas declined to the lowest in 21 weeks on forecasts for mild weather in the eastern U.S. The yen appreciated against all 16 major peers while the Shanghai Composite Index dropped 1.7% after Chinese industrial companies reported slower profit growth. The MSCI Emerging Markets Index slid 0.8%.
An index of pending U.S. home sales dropped 0.4% after climbing a month earlier to the highest level since 2006, the National Association of Realtors said. Net income at Chinese industrial companies rose 6.3% in June from a year earlier, data showed on July 27, down from 15.5% in May. The Federal Open Market Committee, which has said it may start paring stimulus should the economy meet the central bank’s forecasts, convenes July 30-31.
“Some of the economic data appears softer than we anticipated,” Eric Teal, who helps oversee $5 billion as chief investment officer at First Citizens BancShares Inc., said in a telephone interview from Raleigh. “Some pause might be in order over the next few months after the strong gains the first half of the year.”
The Chicago Board Options Exchange Volatility Index, or VIX, climbed 5.7% to 13.45 today, after adding 1.4% last week. The equity volatility gauge reached its highest level this year in June and has since fallen 34%.
The S&P 500 retreated after climbing for two straight days. The index is down 0.7% from its last record closing level on July 22. Energy shares slumped 1.1% as a group and financial companies lost 0.8% to lead declines among the 10 main industry groups in the S&P 500, with telephone and utility stocks posting the only gains. Bank of America Corp., Chevron Corp., Exxon Mobil Corp. and JPMorgan Chase & Co. lost at least 0.8% for the biggest declines in the Dow Jones Industrial Average.
Perrigo Co. dropped 6.6% after saying it will buy Irish drugmaker Elan Corp. for $8.6 billion. Omnicom Group Inc. added 0.5% after saying it will merge with France’s Publicis Groupe SA to create the world’s largest advertising company.