By Stephen Kirkland and Rita Nazareth
Jan. 23 (Bloomberg) -- U.S. stocks fell, erasing early gains,
as investors weighed developments in Europe’s efforts to tame its debt
crisis and debated whether a three-week rally in equities was warranted.
The euro approached its strongest level of 2012, while Treasuries fell
and commodities advanced.
The S&P 500 fell 0.3 percent to 1,311.79 at
12:29 p.m. in New York after rallying as much as 0.5 percent. The Dow
Jones Industrial Average erased gains after earlier rising above its
highest closing level since May. The Stoxx Europe 600 Index added 0.5
percent and the euro appreciated 0.6 percent to $1.3012. The Greek
two-year note yield dropped to 176 percent after surging to more than
200 percent. Oil added 1 percent and copper advanced 1.4 percent.
Ten-year U.S. Treasury note yields increased three basis points to 2.06
percent.
U.S. equities turned lower after rallying in the
first hour of trading amid optimism European finance ministers will make
progress in debt-crisis discussions. Germany and France said talks
between Greece and bondholders were making progress, while a government
official in Berlin said Germany may be open to combining Europe’s two
bailout mechanisms and boosting their funding limit.
“It’s been a brisk run in risk assets this year,”
Stephen Wood, who helps oversee $137.6 billion as the New York-based
chief market strategist for Russell Investments, said in a telephone
interview. “The question is: would the degree of market movement be
consistent with fundamentals? On the U.S. side, you have an improving
economy. That is competing with the other side of the Atlantic, which is
a source of volatility and uncertainty.”
Chart Levels
The S&P 500 turned lower today after reaching
1,322.28, a level close to a trendline drawn from the index’s all-time
high in 2007 and its peak last year in April, as well as a “downtrend”
connecting its May and July highs, according to Ari Wald, a New
York-based technical strategist at Brown Brothers Harriman & Co.
The index’s 14-day relative strength index, which
measures the degree that gains and losses outpace each other, has
stayed above 65 since Jan. 17, matching the longest streak since
February, according to Bloomberg data. Some technical analysts consider
RSI readings above 70 a sign that stocks have risen too far, too fast.
“Overextended conditions leave the index vulnerable to short-term consolidation,” Wald said in a note today.
The S&P 500 has climbed 4.3 percent in 2012,
the best start to a year since 1997, after companies from Goldman Sachs
Group Inc. to Union Pacific Corp. and EBay Inc. topped analysts’ profit
projections.
Procter & Gamble Co., Cisco Systems Inc. and
McDonald’s Corp. lost at least 1.4 percent to lead the Dow’s decline
today.
Barton Biggs, who increased bets on U.S. equities
before the Standard & Poor’s 500 Index rallied last month, said he
remains bullish even amid concerns over progress in solving Europe’s
debt crisis.
Two Types of Terror
“I’m terrified I’m not long enough if we’re going
to have a strong rally here, which we could,” he said during an
interview on Bloomberg Television’s “In the Loop” with Betty Liu today.
Biggs said his net-long position in equities is 65 percent. At the same
time, “I’m terrified I’m too long if the apocalypse is coming in
Europe,” he said.
Minefinders Corp., operator of the Dolores gold
and silver mine in Mexico, jumped 25 percent after Pan American Silver
Corp. agreed to acquire the company for about C$1.5 billion.
European Stocks, Euro
Two shares gained for each that fell in the Stoxx
600. Outokumpu Oyj, Finland’s biggest producer of stainless steel,
jumped 18 percent as it held discussions that may lead to a merger with a
unit of ThyssenKrupp AG.
The euro advanced 0.5 percent against the yen.
Negotiators for Greece and the Institute of International Finance
broadly agreed on the terms of a debt swap over the weekend, FT
Deutschland says, citing unidentified government officials.
IMF Managing Director Christine Lagarde said that
efforts to secure additional IMF resources of $500 billion are “on the
optimist side.” Lagarde made her comments during a panel discussion in
Berlin today.
The yield on the 10-year Greek bond dropped 59
basis points to 33.57 percent. The German 10-year bund yield rose five
basis points to 1.98 percent as the government sold 2.54 billion euros
($3.29 billion) of 12-month bills.
The 10-year U.S. Treasury note yield rose four
basis points to 2.06 percent before the government auctions $56 billion
of three- and six-month bills.
Oil rose to $99.41 a barrel. Dutch Foreign
Minister Uri Rosenthal said EU foreign ministers adopted sanctions that
will ban imports of crude and oil products from Iran as of July 1. The
S&P GSCI gauge of 24 commodities increased 0.9 percent. Nickel, used
to make stainless steel, climbed 1 percent in London, the third
consecutive gain.
The MSCI Emerging Markets Index rose 0.5 percent,
advancing for a fifth day, the longest run of gains in seven weeks.
Markets including China, South Korea and Taiwan were shut today for the
Lunar New Year holiday.
--With assistance from Lynn Thomasson in Hong Kong and Claudia
Carpenter, Andrew Rummer, Daniel Tilles and Sarah Jones in London.
Editors: Stephen Kirkland, Michael P. Regan
To contact the reporters on this story: Stephen Kirkland in London at
skirkland@bloomberg.net;
Rita Nazareth in New York at
rnazareth@bloomberg.net
To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net
