“The market’s going to be watching the FOMC minutes this week to see if there’s any more indication in regards to potential of tapering in September,” Martin Lakos, a Sydney- based director at Macquarie Private Wealth, said on Bloomberg Television’s “First Up” with Susan Li. “There are still some concerns that a big move in QE will be disruptive.”
The S&P 500 decreased 2.1 last week, its biggest drop since June, and is down almost 4% from its last record on Aug. 2. The Dow Jones Industrial Average sank 2.2% last week, the biggest drop in 14 months.
Gauges of energy and financial companies lost more than 1.3% today to lead declines in nine of the 10 main industry groups in the S&P 500.
Zillow Inc. tumbled 7.1% as it agreed to acquire New York City real-estate website StreetEasy. JPMorgan Chase & Co. slipped 2.7% to lead losses in the Dow after the New York Times reported that the U.S. Securities and Exchange Commission’s anti-bribery unit is investigating whether the bank hired the children of Chinese officials to help its business in that nation. Apache Corp. tumbled 4.6%, pacing losses in energy stocks.
Intel gained 1.7% after Piper Jaffray Cos. raised its rating on the shares. Edwards Group Ltd. surged 18% after Atlas Copco AB agreed to buy the company for $1.2 billion. Dollar General Corp. gained 3.1% after JPMorgan raised its rating on the shares.
The Stoxx 600 retreated after climbing for three straight weeks, as three shares fell for every two that advanced. Holcim Ltd. dropped 4.4% as UBS AG downgraded its recommendation on the cement maker. Lafarge SA, a competing cement producer, slid 4.2%.
The euro gained 0.1% to $1.3337 while the dollar was little changed against the yen. The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, added 0.1%.
The MSCI Emerging Markets Index lost the most since July 3. Investors are favoring U.S. stocks over emerging markets by the most ever as fund flows and volatility measures show institutions are increasingly seeking the relative safety of American equities.
Almost $95 billion was poured into exchange-traded funds of American shares this year, while developing-nation ETFs saw withdrawals of $8.4 billion, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index trades at 16 times profit, 70% more than the MSCI Emerging Markets Index. A measure of historical price swings indicates the U.S. market is the calmest in more than six years compared with shares from China, Brazil, India and Russia.
Cash is draining from emerging-market ETFs and flowing into U.S. stock funds at the fastest rate on record as bulls say an unprecedented third year of higher earnings growth will support the S&P 500 even as the Federal Reserve begins to remove stimulus. Developing-nation investors say the ETFs will lure more cash after equity valuations reached a four-year low.