U.S. stocks fell, after benchmark indexes climbed to records, while Treasuries rose before the government releases its monthly jobs report. The euro weakened as the region’s central bank said it’s prepared to take action to head off deflation.
The Standard & Poor’s 500 Index slipped 0.1 percent to 1,888.77 at 4 p.m. in New York. The Dow Jones Industrial Average (INDU) was little changed, closing within five points of its record after reaching an intraday high. Treasury 10-year yields slid for the first time in three days. The euro weakened against 10 of its 16 major peers. Italy’s 10-year yield fell to an eight-year low and Spain’s rate dropped 4 basis points. The Stoxx Europe 600 Index added 0.1 percent. An index of developing-nation shares dropped 0.6 percent, ending the longest run of gains since January 2013.
Initial jobless claims rose more than forecast last week, according to the Labor Department, before the monthly payrolls data due tomorrow. A separate report today showed service industries in the U.S. expanded at a faster pace in March. European Central Bank President Mario Draghi said the ECB would use unconventional policy if required, after leaving the main refinancing rate at an all-time low of 0.25 percent today.
“The market still wants to be positive and has this feeling of goodwill, but at times it runs into a little bit of resistance,” Robert Pavlik, chief market strategist at Banyan Partners LLC, which manages $4.5 billion, said in a phone interview. “People are a little bit more cautious. As we get closer to the payroll report, we’ll be in wait-and-see mode.”
The S&P 500 index (SPX) rose 0.3 percent yesterday to close at a record. The gauge has climbed 2.2 percent this year, with utilities gaining the most among 10 industry groups. The index now trades at 17.4 times reported earnings. That’s the highest level since 2010 and 11 percent above its five-year average, according to data compiled by Bloomberg.
The Institute for Supply Management’s U.S. non-manufacturing index increased to 53.1 in March from 51.6 a month earlier, the Tempe, Arizona-based group said today. The median forecast in a Bloomberg survey of 77 economists called for a gain to 53.5.
Jobless claims increased 16,000 in the period ended March 29 to a five-week high of 326,000, the Labor Department said. A revised 310,000 applications were filed in the previous week, the fewest since Sept. 7. The median forecast of 52 economists surveyed by Bloomberg called for 319,000 claims.
The government’s monthly jobs report due tomorrow will show that hiring increased in March, according to forecasts compiled by Bloomberg.
Fed Chair Janet Yellen said last week that “considerable slack” in the labor market is evidence that the central bank’s unprecedented accommodation will be needed for “some time” to put Americans back to work.
Reports from hiring to factory output had shown weakness this year as freezing temperatures and mountains of snow kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders.
Investors have added $1.7 billion to U.S. equity exchange-traded funds in the past five days and put $984 million in bond ETFs, data compiled by Bloomberg show. Health-care stocks saw the most money added among industry ETFs, increasing $571 million during the past week. Industrial ETFs took in $459 million in the period.
The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, rose 2.1 percent to 13.37 today. The gauge closed yesterday at its lowest since January after five straight declines.
Google Inc. Class C (GOOG:US) shares rose 0.5 percent to $569.74 while the Class A shares added 0.6 percent to $571.50. The company issued 330 million nonvoting C class shares as part of a move that cements control for founders Sergey Brin and Larry Page. The A shares carry one vote, while non-trading B shares, mostly owned by the founders, have 10 votes.
Treasuries rose, pushing 10-year yields down from almost the highest levels since January, before tomorrow’s jobs report. The U.S. 10-year yield fell one basis point to 2.79 percent.
Italy’s 10-year yield dropped five basis points to 3.25 percent. It touched 3.249 percent, the lowest since September 2005. The yield on 10-year German bunds fell one basis point to 1.60 percent and the Spanish 10-year yield declined four basis points to 3.22 percent.
Draghi said policy makers debated large-scale asset purchases among a range of measures to head off the threat of deflation in the euro region. ECB officials are discussing a new departure as inflation slows to a level that’s just a quarter of their 2 percent goal. With a rising euro and stubbornly high unemployment also threatening the region’s recovery, other options include further rate cuts, which would take the deposit rate into negative territory.
“Draghi tends to speak vaguely and just reiterate earlier speeches but he was more specific and aggressive this time round,” Steven Santos, a broker at X-Trade Brokers DM SA, said by phone from Lisbon. “It looks like the ECB is increasingly pondering cutting the main interest rate and that the central bank might even come up with new measures soon. Markets clearly want more intervention from Draghi.”
The euro weakened for a second day against the dollar, and dropped for the first time in five days versus the yen. The 18-nation currency slipped 0.4 percent to $1.3719 and lost 0.3 percent to 142.57 yen. The dollar was little changed at 103.92 yen.
The Stoxx Europe 600 Index advanced for an eighth day, extending its longest winning streak since October. The equity benchmark has gained 4 percent since March 24.
The MSCI Emerging Markets Index, which rallied 6.8 percent in the previous nine days, lost 0.5 percent amid concern that the crisis in Ukraine will escalate after NATO leaders warned Russia has troops on a high state of readiness on its neighbor’s border.
The ruble lost 0.4 percent against the dollar, and the Micex Index of Russian stocks slid 0.5 percent. Russia ratcheted up pressure on Ukraine with a 26 percent increase in the price of natural gas after Foreign Minister Sergei Lavrov said NATO shouldn’t expand its presence in eastern Europe.
NATO leaders warned yesterday that they haven’t seen signs of a significant reduction in Russian military forces along Ukraine’s border and any incursion would be a “historic mistake.”
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong gained 0.7 percent, while the Shanghai Composite Index dropped 0.7 percent. China outlined a package of measures including tax relief to support the economy and create jobs after a slowdown endangered Premier Li Keqiang’s target of 7.5 percent growth this year.
“We are starting to see more positive talk from officials in terms of the potential for stimulus” in China, said Angus Gluskie, managing director at White Funds Management in Sydney, who helps oversee about $550 million.
U.S. natural gas jumped 2.4 percent as an unusually cold start to spring sent stockpiles to an 11-year low. The Energy Information Administration said stockpiles fell 74 billion cubic feet in the week ended March 28 to 822 billion, the least since 2003. Analyst estimates compiled by Bloomberg showed an expected withdrawal of 75 billion.
Gold fell for the sixth time in seven session as signs of quickening U.S. economic growth bolster forecasts for the Fed to increase interest rates, crimping demand for the metal as a store of value. Futures declined 0.5 percent to $1,284.60.
Brent crude rose the most in a month amid concern that talks between the Libyan government and rebels won’t restore oil exports. Brent gained 1.3 percent to $106.15 a barrel, while West Texas Intermediate crude climbed 0.7 percent to $100.29 a barrel.
The rebels’ Executive Office for Barqa, representing the region of Cyrenaica, denied a report that the group will cede one of the four ports that have been under its control since July to the government in a few days. Libya’s oil output dropped to 250,000 barrels a day in March from 1.4 million a year earlier, according to data compiled by Bloomberg.
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