S&P 500 drops from record as Treasuries, gold gain

Economic Data

Jobless claims fell by 2,000 to 339,000 in the period ended Dec. 28, the Labor Department said. The median forecast of 26 economists surveyed by Bloomberg called for 344,000 claims. The ISM’s factory index fell to 57 in December from the prior month’s 57.3, which was the highest since April 2011. Readings above 50 indicate expansion.

Equity returns will slow this year, Wall Street strategists forecast. The S&P 500 will end 2014 at 1,950, according to the average of 20 estimates compiled by Bloomberg. That represents a 5.5% gain from the end of 2013.

Analysts are predicting 116 stocks in the index will see price declines this year, according to average year-end targets compiled by Bloomberg. That’s the greatest number of bearish forecasts for the S&P 500 in nine years, the data show.

The average company in the index is estimated to rise 4.8% this year, according to the data. That’s the least optimistic forecast since Dec. 31, 2004, when the average was 4.7%. Alcoa Inc. and Harris Corp. are among the companies projected to fall the most this year.

European Markets

The Stoxx 600 fell after earlier rising as much as 0.3%. The index climbed 17% in 2013, its largest annual gain since 2009. It reached its highest level since May 2008 on Dec. 31.

Fiat SpA shares surged 16% after the carmaker agreed to buy the remaining stake in Chrysler Group LLC that it doesn’t already own. Exor SpA, its biggest shareholder, jumped 4.5%. Debenhams Plc climbed 3% after the retailer’s chief financial officer resigned. The stock slumped 12% on Dec. 31 after the company said profit will drop in the first half of the financial year.

Ophir Energy Plc lost 8.2% after the U.K oil and gas explorer said it didn’t find hydrocarbons at a well in Tanzania. CGG SA slipped 3% after UBS AG lowered its rating on the surveyor of oilfields.

Weak Start

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 1%, the biggest loss since Dec. 20. Data yesterday showed China’s official Purchasing Managers’ Index slipped to a four-month low in December, while a private report today also signaled manufacturing grew at a slower pace.

“The weaker PMI probably heralds a weak start of economic growth this year as China is still finding a new growth model,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co. “The weaker economy will hold back stocks and makes stock picks more difficult this year.”

China’s President Xi Jinping said in his first New Year’s address that the world’s second-largest economy must press ahead with reforms this year to bolster people’s livelihoods and make the country “rich and strong.”

Turkey’s lira slipped as much as 2% to 2.1886 per dollar and the benchmark stock index slid 1.2%. The currency tumbled last month the most since September 2011 as a corruption probe embroiled Prime Minister Recep Tayyip Erdogan’s cabinet and led three ministers to quit.

Brazil’s real sank 1% versus the dollar as the central bank began scaled-back support for the currency.

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