U.S. stocks retreat with Treasuries, gold after Fed minutes

Jobs Data

Companies in the U.S. boosted payrolls by 238,000 in December, compared with a 200,000 advance predicted in a Bloomberg survey, ADP Research Institute data showed. The Labor Department publishes the unemployment rate and hiring figures for last month on Friday.

Among U.S. stocks moving, Twitter Inc. dropped 3.2%, falling for a third day, amid an analyst downgrade. Ford Motor Co. gained 1.1% after Chief Executive Officer Alan Mulally ruled himself out from a race for the top job at Microsoft Corp. Micron Technology Inc. jumped 9.5% after reporting quarterly revenue that topped estimates. Forest Laboratories Inc. climbed 18% as it agreed to buy Aptalis Pharma for $2.9 billion.

The S&P 500 rose 0.6% yesterday, snapping a three- day drop.

The dollar rose to a four-month high, adding 0.3% to $1.3578 per euro after appreciating to $1.3554, the strongest since Dec. 5.

Treasury Yield

Treasuries fell for the first time in three days, as the government auctioned $21 billion of 10-year notes amid speculation economic growth is accelerating enough to spur the Fed to further slow its stimulus.

The benchmark U.S. yield is higher than 15 of 24 developed countries, according to data compiled by Bloomberg. The next lowest is the U.K. at 2.96%, while the next highest is Ireland at 3.52%.

“After the better-than-expected ADP number, the expectations for the jobs report on Friday are rising and that has caused the spike in yield,” said Gabriel Mann, a U.S. government-bond strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, one of 21 primary dealers that trade with the Fed. “Unless we get a very strong report it will be tough to move much higher in yields. We are buyers of dips at these levels.”

Equity Valuations

HSBC Holdings Plc cut U.S. stocks to underweight from neutral, citing high valuations compared with the rest of the world, earnings near record highs and the possible removal of monetary stimulus at a faster rate than in other developed markets. Companies in the S&P 500 traded at 17.3% reported earnings, up from 14.5 at the start of 2013.

Global equity values are close to reaching a record for the first time since 2007. The total market capitalization of stocks around the world has risen to $61.5 trillion, near the all-time high of $62.6 trillion from October 2007, according to data compiled by Bloomberg.

The Stoxx Europe 600 Index rose 0.1% for a second day of gains. A gauge of banks in the index climbed 1.3%, the biggest increase among 19 industry groups. Trading volumes in the Stoxx 600 were 53% above the average in the past 30 days, according to data compiled by Bloomberg.

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