U.S. stocks pare gains on economic data as metals rally

U.S. equities pared earlier gains as investors weighed better-than-forecast data on consumer confidence against a drop in home sales. European stocks rebounded after yesterday’s decline and metals advanced.

The Standard & Poor’s 500 Index (CME:ESM14) advanced 0.2 percent to 1,861.76 as of 11:07 a.m. in New York, after gaining as much as 0.8 percent earlier. The Stoxx Europe 600 Index climbed 1.2 percent after falling 1.1 percent yesterday, the most in two weeks. The euro weakened for the first time in three days against the dollar. The ruble strengthened 1.2 percent against the U.S. currency. The yield on 10-year Treasuries added one basis point to 2.74 percent. Copper, nickel and aluminum climbed more than 1.1 percent.

An index of U.S. consumer confidence rose more than forecast this month while home sales dropped in February, data showed today. German business confidence fell for the first time in five months. The world’s top industrial powers threatened further sanctions to deter Russian President Vladimir Putin from taking over other parts of Ukraine and suspended Russia from participating in the Group of Eight.

“The U.S. economy seemed to have cooled off from the pace it’s on toward the end of last year,” Curtis Holden, a senior investment officer at Tanglewood Wealth Management in Houston, said in a phone interview. His firm oversees about $800 million. “There may be a little relief recently that things may be stable here. Things don’t look spectacular here, but they look OK. The market is trying to piece together about how concerned should we be about things going on overseas.”

The S&P 500 slid yesterday as economic data signaled a slowdown in American manufacturing and biotechnology shares slumped. The benchmark index reached an intraday record on March 21 as data indicated the economy is pulling out of a slowdown linked to unusually harsh winter weather.

Fed Stimulus

Three rounds of bond purchases from the Federal Reserve have helped fuel economic growth, sending the S&P 500 surging as much as 178 percent from its 2009 low. Fed Chair Janet Yellen said on March 19 that the central bank’s stimulus program could end this fall and benchmark interest rates may rise about six months later.

Fed Bank of Philadelphia President Charles Plosser said in an interview on CNBC today that the central bank wants to get back to normal policy, and that he doesn’t think the Fed changed its position on a rate rise.

The Conference Board’s index of U.S. consumer confidence rose to 82.3 in March from 78.3 a month earlier, the New York- based private research group said today. The median forecast in a Bloomberg survey of 76 economists called for a reading of 78.5 this month. Consumer spending accounts for about 70 percent of activity in the world’s largest economy.

Another report showed purchases of new homes in the U.S. fell in February to the lowest level in five months, a sign the industry may take time to pick up after inclement weather damped demand earlier in the year.

Home Prices

Residential real-estate prices climbed at a slower pace in the year through January than a month earlier, according to the S&P/Case-Shiller index of property values in 20 cities.

Germany’s Ifo institute business-climate index, based on a survey of executives, fell to 110.7 in March from 111.3 in February, the highest level since July 2011. Economists predicted a decline to 110.9, according to a Bloomberg survey.

Leaders Pledge

The Stoxx 600 advanced today after losing 1.1 percent yesterday, the most since March 7. The index is almost unchanged for this year. The number of shares changing hands today in Stoxx 600-listed companies was 12 percent lower than the 30-day average, according to data compiled by Bloomberg.

Meeting for the first time since last week’s annexation of Crimea by Russia, Group of Seven leaders said last night they won’t attend a planned G-8 meeting which was to have been held in Sochi, site of the Winter Olympics, and will instead hold their own summit in June in Brussels.

Both sides in Ukraine’s crisis spent the day calculating what to do next, with Russia consolidating its control over Crimea and maintaining forces along the border with Ukraine in the most serious confrontation between Moscow and the U.S. and its allies since the demise of the Soviet Union.

The ruble gained 1.2 percent against the dollar, and Moscow’s Micex Index increased 2 percent.

The MSCI All-Country World Index gained 0.4 percent after four consecutive days of declines. The MSCI AC Asia Pacific Index was little changed after rising 1.2 percent yesterday, the most in a month.

Treasury Yields

Treasury short-term notes were the cheapest in almost four years versus global peers before the U.S. auctions $32 billion of two-year debt.

Treasuries due in one to three years yielded six basis points more than same-maturity non-U.S. sovereign debt as of yesterday, based on Bank of America Merrill Lynch data. A basis point is 0.01 percentage point. The difference was the most since April 2010. It was negative as recently as last week.

The euro weakened against all but three of its 16 major peers as Reuters reported European Commission official Antonio Tajani as saying the currency was too strong. Bundesbank President Jens Weidmann said a discussion about introducing further stimulus was not out of the question.

Copper (COMEX:HGJ14) futures climbed 1.9 percent. China is the biggest buyer of the metal. Anglo American Plc stopped work at its largest copper mine in Chile, the world’s biggest producer, after protests by contract workers turned violent.

The MSCI Emerging Markets index rose 0.4 percent after gaining 1 percent yesterday.

Hungary’s benchmark BUX Index rose for a second day, increasing as much as 1.1 percent. The central bank reduced the benchmark two-week deposit rate by 10 basis points to a record- low 2.6 percent in the 20th consecutive cut.

The WIG 30 Index advanced 1.5 percent in Warsaw, paced by gains in Bank Pekao SA and copper and silver producer KGHM Polska Miedz SA.

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