Wednesday, 17 June, 2015

U.S. Stocks Pare Gains Before Fed; Treasuries Rise as Gold Falls

(Bloomberg) — U.S. stocks fluctuated after erasing earlier gains, while Treasures slid before the Federal Reserve’s decision on interest rates. European stocks fell amid signs the impasse in Greek aid talks was deepening. The Standard & Poor’s 500 Index rose less than 0.1 percent at 11:32 a.m. in New York, erasing a climb of 0.4 percent. Treasuries fell, sending 10-year yields five basis points higher to 2.36 percent. The Stoxx Europe 600 Index lost 0.4 percent. Oil reversed gains after an inventory report. Fed Chair Janet Yellen will conclude a two-day meeting of her board Wednesday amid speculation mixed U.S. economic data and Greece’s deadlocked debt negotiations will complicate the central bank’s drive to raise interest rates. Greece needs to seal a deal before the euro area’s bailout expires on June 30, or risk missing payments on its debt of about 313 billion euros ($352 billion). “People will continue to be looking for any clues as to exactly when the Fed will be raising interest rates,” Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc., said by phone. “Most people aren’t expecting it until September and maybe even not until later in the year or until early 2016. Of course, the Greece situation will continue to be in the background.” The U.S. central bank meets as data continues to show uneven gains in the economy after a first-quarter slowdown. A report Tuesday indicated builders began work on fewer houses in May following a surge the prior month. That followed a disappointing factory report on Monday that pushed stocks lower. Rate Liftoff Traders put the odds of a September rate increase at 47 percent in the U.S. Tuesday, down from 53 percent as recently as last Friday, data compiled by Bloomberg show. Yellen will hold a press conference following the rate decision. “The only thing that matters is Chairwoman Yellen’s commentary about rates,” said Michael James, a managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “Nobody is really going to be paying too much attention or giving too much intellectual energy to what’s going to happen in the first couple of hours.” Dutch Finance Minister Jeroen Dijsselbloem said he told Greece a deal can’t be reach on the last day and two lawmakers said German Finance Minister Wolfgang Schaeuble told a parliamentary hearing the government is making contingency plans for failure to reach an aid deal. Among U.S. stocks moving Wednesday, utility shares jumped 0.9 percent to lead gains among the 10 S&P 500 groups. Energy shares pared earlier gains to trade little changed. Adobe Systems Inc. fell 1.3 percent after giving a quarterly sales forecast that fell short of analysts’ estimates. T-Mobile US Inc. climbed 2.4 percent after Germany’s Manager Magazin reported that Comcast Corp. is interested in a deal with the mobile-phone company. FedEx Corp. declined 3 percent after its fourth-quarter profit trailed analysts’ estimates. Emerging Markets The MSCI Emerging Markets Index added 0.3 percent, rebounding from the lowest level since March 27. Hong Kong’s Hang Seng China Enterprise Index rose 1.2 percent and the Shanghai Composite Index climbed 1.7 percent, erasing earlier declines of as much as 2.5 percent. Russia’s ruble fell for the first time in three days, slipping 0.3 percent. The European Union agreed on Wednesday in Brussels to prolong the trade and investment curbs, two EU officials said on condition of anonymity under EU media rules. Final confirmation of the move is due June 22, they said. Spain’s 10-year bonds rose for a second day relative to Germany’s, which are perceived to be the safest in the euro region, showing that there are limits to the risk of contagion from Greece’s debt crisis Portugal’s 10-year bond yield fell seven basis points to 3.14 percent, Spain’s slipped to 2.30 percent and Greece’s declined eight basis points to 12.86 percent. The Bloomberg Commodity index increased 0.6 percent. Wheat, corn and soybeans rose on concern that rain from Tropical Storm Bill will delay crop plantings in the U.S. Oil initially held gains after a government report showed that U.S. crude stockpiles dropped a seventh week, their longest stretch of declines since the beginning of 2014. West Texas Intermediate then erased the advance and fluctuated near $60 a barrel. Brent crude added 0.6 percent to $64.09. Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). 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