U.S. stocks extended the worst monthly drop since May 2012 as investors weighed a smaller-than- forecast increase in consumer spending and prospects for military action against Syria. European shares dropped and Portuguese bond yields surged amid concern the nation will struggle to meet its deficit target.
The Standard & Poor’s 500 Index lost 0.2% to 1,634.57 at 10:14 a.m. in New York to extend its loss for August to more than 3%. The Stoxx Europe 600 Index retreated 0.9% and the MSCI Emerging Markets Index gained 0.7%. Portuguese yields jumped to a five-week high. Ten-year Treasury yields were little changed at 2.76%, with the benchmark note poised for a fourth month of losses. West Texas Intermediate oil slipped 0.4% to $108.35 a barrel as silver and gold retreated. The yen strengthened against most of its 16 major peers.
Concern that conflict with Syria will disrupt Middle East oil supplies eased as U.K. Prime Minister David Cameron failed to gain parliamentary backing for military action. U.S. consumer spending increased for a third month in July, a Commerce Department report showed. In Portugal, the Constitutional Court said late yesterday that it opposed a plan to end labor contracts for some state employees.
“If you are a creditor of Portugal, that news doesn’t sound very good,” said Luca Jellinek, head of European rate strategy at Credit Agricole Corporate & Investment Bank in London. “It’s the third time the court turns down budget-saving measures. But I don’t think ultimately it’s going to derail what’s going on in Portugal. It just makes it less efficient and harder to slim down the state.”
Commodities outperformed stocks and bonds this month. The S&P GSCI gauge of 24 raw materials rose 3.4% in August, while the MSCI All-Country World Index of equities declined 2% and the BofA Merrill Lynch Global Broad Market Index of debt fell 0.4%.
The S&P GSCI dropped 0.5% as silver declined to $23.46 an ounce. Gold retreated to $1,394.48 an ounce, narrowing this month’s gain to 5.2%.
Among U.S. stocks moving today, Salesforce.com Inc jumped in early trading as the provider of customer-management software announced sales and profit forecasts that beat analysts’ projections. Krispy Kreme Doughnuts Inc. tumbled after reporting second-quarter earnings that trailed analysts’ estimates as costs increased.
European oil producers led losses in the Stoxx 600 as BP Plc, Royal Dutch Shell Plc and Total SA lost at least 0.9%. Royal KPN NV slid 6.4% after America Movil SAB said it may withdraw its bid for the Dutch phone company. Late yesterday, KPN’s foundation said it had exercised an option to buy preferred shares, giving it almost 50% of issued and voting stock in the telecommunications operator.