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Stocks fell, giving U.S. equities the longest slump since November and driving Spanish shares to the lowest level since 2009, after China posted slower-than- forecast economic growth and American consumer confidence weakened. Commodities slid and Treasuries rose.
The Standard & Poor’s 500 Index (SPX) lost 1.3 percent to 1,370.26 at 4 p.m. New York time, declining a second straight week. The Stoxx Europe 600 Index fell 1.5 percent, completing a four-week slump, as Spain’s IBEX 35 sank 3.6 percent to a three- year low. The cost of insuring against a Spanish default rose to a record. The S&P GSCI Index (SPGSCI) of 24 raw materials slid 0.7 percent as copper fell 2.5 percent. Yields on 10-year Treasuries decreased six basis points to 1.99 percent.
China said gross domestic product increased 8.1 percent in the first quarter, the smallest gain since 2009 and less than the 8.4 percent median growth projection in a Bloomberg survey. JPMorgan Chase & Co. (JPM), Google Inc. (GOOG) and Wells Fargo & Co. (WFC) fell even after they beat profit estimates. Equities also retreated after a gauge of U.S. consumer confidence fell.
“It’s a very fragile market,” Mark Bronzo, who helps manage about $125 billion at Guggenheim Investments in Irvington, New York, said in a telephone interview. “You’re seeing China slowing down. There’s concern that the worst is not over in Europe. The U.S. economy has done a bit better. Yet the question is: Is it sustainable?”
The S&P 500 retreated 2 percent this week and has fallen 3.4 percent since reaching a four-year high on April 2. The Stoxx 600 (SXXP) dropped 2.2 percent this week and posted the longest stretch of weekly losses since August.
Benchmark stock indexes for Spain, Italy, France, Germany, Austria and Sweden declined at least 2 percent today, the most among developed-market nations, according to data compiled by Bloomberg. Spain’s IBEX 35 posted the biggest loss since Nov. 1.
The cost of insuring against a Spanish default reached a record high as Prime Minister Mariano Rajoy struggles to prevent the nation from becoming the fourth euro-region member to need a bailout. Credit-default swaps on Spain rose to 498, topping the all-time high of 493 set Nov. 23 according to CMA.
JPMorgan, the largest U.S. bank, declined 3.6 percent even after reporting first-quarter profit of $1.31 a share, topping (JPM) the average analyst estimate of $1.17 a share in a Bloomberg survey. Mortgage revenue surged and trading almost doubled from the fourth quarter.
Wells Fargo, the biggest U.S. home lender, retreated 3.5 percent. It beat the average analyst earnings projection by 2 cents, reporting profit of 75 cents a share.
Google lost 4.1 percent. First-quarter profit (GOOG), excluding certain costs, was $10.08 a share. Analysts had projected $9.64 on average, data compiled by Bloomberg show. The Internet search engine unveiled a plan yesterday that lets it issue new shares without diluting the founders’ voting power.
Crude oil futures declined 0.8 percent to $102.83 a barrel and copper futures slipped to $3.627 a pound. China is the biggest buyer of the metal and largest energy consumer. Gold futures retreated 1.2 percent, the most in a week, to $1,660.20 an ounce amid concern that the slowdown in China may curb demand for the metal.
The 30-year Treasury bond yield dropped eight basis points to 3.13 percent. The Federal Reserve purchased $1.8 billion of Treasuries as part of a program to boost the U.S. economy.
U.S. government debt is approaching the most expensive levels in almost five weeks, according to the term premium, a model created by Fed economists. The figure reached minus 0.64 percent today after touching negative 0.65 percent on April 10.
The won strengthened versus 15 of 16 major counterparts after North Korea’s rocket launch failed. South Korea’s Kospi Index increased 1.1 percent. North Korea launched the rocket in defiance of international pressure including U.S. warnings that it would nullify a food-aid deal. The U.S. military said the rocket fell harmlessly into the sea.
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