U.S. stocks wind down before holiday weekend

U.S. stocks were little changed with Treasuries before a holiday weekend. The euro weakened for a fourth day as German business confidence fell, fueling speculation the European Central Bank will boost stimulus. Copper led industrial metals higher.

The Standard & Poor’s 500 Index (COMEX:HGM14) rose 0.1 percent at 9:31 a.m. in New York, poised for the first weekly gain in three. Europe’s shared currency depreciated 0.2 percent to $1.3627, after touching a three-month low of $1.3616. The ruble extended gains after President Vladimir Putin said Russia will respect the vote for a Ukrainian president this weekend. Copper rose 0.6 percent and aluminum climbed to a three-week high.

New home sales in the U.S. probably rose in April, economists said before a Commerce Department report today. Business sentiment in the euro area’s largest economy declined more than analysts forecast, according to data from the Ifo institute. Putin said his government will work with the next president of Ukraine, even though the election won’t meet international standards.

“Today is going to be very quiet with one key data point,” Philip Orlando, the New York-based chief equity-market strategist at Federated Investors Inc., said by phone. “Investors are looking at what’s going in Russia and Ukraine and they’re saying ‘I have no visibility on what’s going to happen over the weekend, so why not shorten up for over the weekend in case something stupid happens.’”

The S&P 500 closed yesterday 0.3 percent away from its record reached May 13, as data showing strength in manufacturing boosted confidence in the economy. The gauge has advanced 0.8 percent this week after slipping for two consecutive weeks.


Bond Market

The yield on the 10-year Treasury note slipped two basis points to 2.54 percent. Treasuries are scheduled to close at 2 p.m. in New York and remain closed Monday, along with U.S. equities markets, for Memorial Day.

A Commerce Department report at 10 a.m. in Washington may show sales of newly built houses rose to 425,000 in April after falling to 384,000 the previous month, according to economists surveyed by Bloomberg.

Central bank officials have been gauging the strength of the economy to help determine the pace of cuts to stimulus efforts that have sent the S&P 500 up as much as 180 percent from a 12-year low in 2009.

The Russell 2000 Index of smaller companies has rallied 1 percent this week. The index tumbled as much as 9.3 percent from a record on March 4 amid concern that prices have outrun earnings. Small-caps and Internet shares were among the biggest victims of the market retreat as investors fled last year’s best-performing equities.


Computer Sales

Hewlett-Packard Co. was little changed today after reporting its third straight drop in annual revenue. About 75 percent of S&P 500 companies that have reported results this season beat analysts’ estimates for profit, while 53 percent exceeded sales projections, data compiled by Bloomberg show.

The U.S. stock market is trading in the tightest range in eight years, according to data from Bespoke Investment Group LLC. In the last three months, the difference between the S&P 500’s intraday high and low has been less than 5 percent, the Harrison, New York-based research group said in a report yesterday.

The ruble strengthened 0.6 percent against the dollar. The Micex Index of stocks rebounded, adding 0.4 percent and extending this week’s climb to 3.1 percent. The gauge is headed for its fourth weekly advance, the longest run of gains since July.


Euro Weakness

The euro declined against most of its 16 major counterparts. Its 14-day relative strength index versus the greenback fell to 29, below the 30 level that signals to some traders an asset has fallen too far, too fast, and may be due to reverse course. The 18-nation currency slid beneath its 200-day moving average at $1.3638, according to data compiled by Bloomberg. The euro also declined as concern grew euro-skeptic parties will gain ground in elections this weekend for the European Parliament.

The Ifo institute’s business climate index, based on a survey of 7,000 executives, fell to 110.4 in May from 111.2 the prior month. Economists predicted a drop to 110.9, according to the median of 38 estimates in a Bloomberg News survey.

“The Ifo survey is the trigger for more euro weakness today,” said John Hardy, the head of foreign-exchange strategy at Saxo Bank A/S in Copenhagen. “The worry now is that momentum is waning in the core and that strengthens the case for the ECB to move in June. There is some nervousness around the European election results too.”


Europe Stocks

The yield on 10-year Spanish bonds dropped seven basis points to 2.98 percent and Italy’s rate slid eight basis points to 3.16 percent.

Sweden’s krona tumbled 0.8 percent to 6.6429 per dollar after depreciating to 6.6503, the weakest level since Nov. 21, after an index measuring Swedish consumer confidence rose less than economists estimated.

Europe’s Stoxx 600 has gained 0.6 percent this week, heading for its sixth weekly advance and longest winning streak for the period since November. Trading volumes today were 23 percent lower than the 30-day average, according to data compiled by Bloomberg.

BTG Plc climbed 5.2 percent after the British biotechnology company said one of its treatments received Food and Drug Administration approval.

Go-Ahead Group Plc jumped 8.9 percent after winning a contract to operate an expanded London rail franchise that will be Britain’s biggest ever. Pandora A/S dropped 4 percent as investors sold a stake of about 10 percent in the Danish jewelry maker.


Thai Coup

Thailand’s army staged its 12th coup in eight decades as the army chief said he was seizing control to restore peace. In Ukraine, 16 soldiers were killed in an attack by pro-Russian insurgents, before the presidential election on May 25.

Thailand’s SET Index fell 0.6 percent while the baht was little changed against the dollar, paring earlier gains. Schools were shut, international television stations were off air and channels broadcast military logos and patriotic music, a day after Thailand’s military seized control following a six-month political stalemate that has sapped economic growth.

After the last coup was announced on Sept. 19, 2006, the baht dropped 1.4 percent the next day before rebounding 1 percent in the following trading session.

Copper rose to $6,915 a metric ton. Construction generates about 40 percent of demand for the metal, according to the Copper Development Association. Aluminum advanced as much as 1.6 percent to $1,824 a ton, the highest since April 29. Aluminum will have a 1.3 million-ton deficit this year, according to Oleg Deripaska, chief executive officer of United Co. Rusal, the world’s largest aluminum producer.

Following a rally in euro-area bond markets that swept yields from Ireland to Italy to record lows this month, Standard & Poor’s added its endorsement, raising Spain’s rating one level to BBB.

Benchmark German 10-year yields were little changed at 1.41 percent. The rate on similar maturity 10-year Treasuries fell one basis point to 2.54 percent.


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