Bloomberg News

Stocks Fall From 5-Month High as Euro Weakens, Commodities Drop

January 23, 2012

Jan. 20 (Bloomberg) -- Stocks dropped, pulling European and U.S. benchmark indexes down from five-month highs, after Google Inc. and General Electric Co. reported sales below analyst estimates while the euro weakened as talks between Greek officials and private creditors entered a third day.

The Standard & Poor’s 500 Index fell 0.2 percent at 9:31 a.m. in New York and the Stoxx Europe 600 Index lost 0.2 percent. The euro depreciated 0.4 percent to $1.2917, while the Dollar Index added 0.1 percent. Oil fell 1.3 percent and copper decreased 0.7 percent, leading commodities lower. Ten-year Treasury yields climbed three basis points to 2.01 percent.

Equities are trimming gains after the best start to a year for the S&P 500 and European shares in 15 years, while the euro declined from a two-week high. Greek officials and private creditors will meet to seek agreement on a debt swap after “long and substantial” discussions yesterday, Finance Minister Evangelos Venizelos said.

“The Greek talks are a risk, there is no guarantee that even if a deal is done that Greece won’t default at a later date,” said Jane Foley, a senior currency strategist at Rabobank International in London. “We have seen an extremely strong start to stocks and the euro this year. There is room for disappointment.”

The S&P 500 retreated from the highest level since July as Google and GE declined.

Earnings Season

Microsoft Corp. climbed as the largest software maker reported second-quarter profit that beat estimates, lifted by holiday sales of Xbox machines and Kinect sensors. Schlumberger Ltd., the world’s largest oilfield-services provider, posted profit of $1.05 a share, compared with a $1.11 average estimate of 15 analysts in a Bloomberg survey.

SunTrust Banks Inc. is among U.S. companies scheduled to release results today. A report at 10 a.m. New York time may show purchases of existing homes climbed 5.2 percent to a 4.65 million annual pace last month, the most since May 2010, according to the median estimate from economists surveyed by Bloomberg.

The decline in the Stoxx 600 reduced this week’s gain to 2.6 percent. Cie. de Saint-Gobain, Europe’s largest building materials’ supplier, led construction shares lower, falling 1.7 percent. UniCredit SpA, Italy’s biggest bank, slid 1.2 percent on the last day of trading for rights to its stock sale.

Relative Strength

The Stoxx 600’s 14-day relative strength index, which tracks momentum by comparing closing prices with daily trading ranges, rose to 70.47 yesterday. When the RSI climbs above 70, some technical analysts say the underlying security is likely to fall.

The euro slipped 0.3 percent against the yen. The dollar advanced versus 11 of 16 major peers tracked by Bloomberg.

Benchmark Greek bonds maturing in October 2022 gained, pushing the yield down 25 basis points to 33.67 percent. Two- year yields jumped 412 basis points to 180.42 percent. German 10-year yields rose five basis points to 1.91 percent.

Oil in New York declined 1.3 percent to $99.08 a barrel and the S&P GSCI index lost 0.6 percent.

--With assistance from Lynn Thomasson in Hong Kong and Matthew Brown, Claudia Carpenter, Emma Charlton and Andrew Rummer in London. Editor: Michael P. Regan

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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