U.S. stocks fell on disappointing retail results and small-cap shares retreated after two days of gains. Emerging-market equities dropped from a six-month high amid political concerns in Thailand and Indonesia, while nickel led industrial metals lower.
The Standard & Poor’s 500 (CME:SPM14) Index dropped 0.4 percent at 9:55 a.m. in New York, while the Russell 2000 Index of small companies sank 1.1 percent. The MSCI Emerging Markets Index lost 0.3 percent after closing yesterday at the highest since October. The SET Index in Bangkok declined 1.1 percent after Thailand declared martial law, while shares in Jakarta dropped the most in five weeks. Nickel fell 2.7 percent after yesterday rising the most in 20 months. Wheat jumped 1 percent on worsening crop conditions.
Retail shares in the S&P 500 retreated 0.6 percent as companies from Dick’s Sporting Goods Inc. to Staples Inc. issued forecasts that fell short of analyst estimates. Thailand’s Army Chief Prayuth Chan-Ocha said the imposition of martial law is not a coup and is aimed at keeping order. In Indonesia, opponents of the presidential frontrunner formed a coalition with the nation’s second-biggest party.
“We need some positive triggers to move the market higher,” said Espen Furnes, who helps oversee about $85 billion at Storebrand Asset Management in Oslo. “Macro data are still sending clear signals towards a further improvement in the economy. The only issue is that the pricing of U.S. equities is getting less attractive. That could make the market more vulnerable to a possible correction at some point.”
Editor's note: This is the inaugural week of FUTURES.com offering a live, streaming squawk box commentary from the S&P trading pits in Chicago.
Staples retreated 11 percent after its earnings forecast was less than estimated. Dick’s dropped 16 percent, while TJX Cos. sank 6.1 percent after cutting the top end of its full-year projection.
Home Depot Inc. rallied 1.9 percent even as the largest U.S. home-improvement retailer’s profit trailed some analysts’ estimates.
The S&P 500 climbed 0.4 percent yesterday in one of the slowest trading days of the year. The benchmark gauge ended little changed last week after reaching a record on May 13. The index trades at 16 times estimated earnings, compared with a five-year average of 14.3 times, according to data compiled by Bloomberg.
The Russell 2000 fell 3.3 percent over three days last week before rebounding 0.6 percent on May 16 and a further 1 percent yesterday. The gauge is 8.7 percent below its record from March.
The Federal Reserve said last month the economy is showing signs of picking up and the job market is improving. There are no economic reports scheduled for today. The central bank will release minutes from its latest meeting tomorrow. Three rounds of bond purchases have helped send the S&P 500 up 179 percent from a 12-year low in 2009.
In Europe, the benchmark index was little changed near a six-year high as investors weighed corporate earnings. Three shares advanced for every two that declined in the Stoxx Europe 600, according to data compiled by Bloomberg.
Vodafone Group Plc fell 4.9 percent after predicting profit will drop this year. Marks & Spencer Group Plc declined 1.3 percent after the U.K.’s biggest clothing retailer reported a third straight drop in annual profit.
HSBC Holdings Plc slid 1 percent and Credit Agricole SA lost 0.4 percent. The European Union’s antitrust arm accused the two banks and JPMorgan Chase & Co. of colluding to manipulate interbank lending rates.
Credit Suisse Group AG added 0.9 percent after Switzerland’s second-biggest bank agreed to pay $2.6 billion for helping Americans hide money from the Internal Revenue Service, concluding a three-year probe by the U.S.
The Jakarta Composite Index slid 2.4 percent and rupiah retreated 0.5 percent versus the dollar. The Thai baht dropped 0.1 percent after losing as much as 0.6 percent.
“There is some profit taking in Indonesia because the presidential election might be tougher than expected and the political crisis in Thailand continues affecting the stocks,” Hertta Alava, head of emerging markets at FIM Asset Management Ltd. in Helsinki, said by e-mail.
Dubai’s DFM General Index tumbled 4.1 percent, the steepest decline among 93 global equity indexes tracked by Bloomberg, to the lowest level in more than a month. The measure has lost 12 percent in five days of declines, headed for the longest rout in almost two years, data compiled by Bloomberg show.
Russia’s Micex Index rose 0.1 percent and the ruble also added 0.1 percent. Soldiers in three Russian regions bordering Ukraine have started to return to their bases after receiving an order from Defense Minister Sergei Shoigu, Russian state TV reported today.
The pound appreciated 0.2 percent to 81.39 pence per euro after reaching 81.20 pence, the strongest level since January 2013. Sterling rose 0.1 percent to $1.6835. Annual inflation quickened to 1.8 percent in April from 1.6 percent a month earlier, compared with a median estimate of 1.7 percent in a Bloomberg survey.
The yield on Italy’s 10-year bond rose eight basis points to 3.22 percent, after reaching 3.24 percent, the highest since April 4. Spain’s 10-year rate added four basis points to 3.05 percent.
European Central Bank Governing Council member Ewald Nowotny said negative deposit rates for the euro area “must still be thoroughly discussed,” raising the possibility that stimulus measures next month will disappoint investors.
The S&P GSCI gauge of 24 commodities dropped 0.1 percent as wheat advanced the most in two weeks after a government report yesterday showed crop conditions deteriorated. Copper dropped 1.1 percent. West Texas Intermediate crude fell 0.3 percent to $102.35 a barrel.