Stocks, Euro, Italian Bonds Retreat Amid G-20's IMF Disagreement
Nov. 4 (Bloomberg) -- Stocks, the euro and Italian bonds slid as a disagreement on boosting the International Monetary Fund's resources to fight Europe's debt crisis overshadowed a drop in the U.S. jobless rate. Treasuries erased early losses.
The Standard & Poor's 500 Index lost 1.2 percent to 1,246.35 at 10:16 a.m. in New York. The Stoxx Europe 600 Index retreated 0.9 percent as the euro weakened 0.7 percent to $1.3724 and 10-year Italian bond yields traded near a euro-era record, climbing 17 basis points to 6.36 percent. The S&P GSCI Index of commodities slipped 0.2 percent, reversing an early 0.8 percent gain. Ten-year Treasury yields slipped two basis points to 2.05 percent after gaining six points earlier.
Equities headed lower as G-20 leaders failed to agree on increasing the IMF's resources, fueling concern European leaders won't be able to tap more foreign aid to tame their debt crisis. The U.S. jobless rate unexpectedly fell to a six-month low of 9 percent, the Labor Department said, as slower-than-forecast jobs growth in October was overshadowed by larger gains in the prior two months.
"We're still held hostage to Europe," Jim Dunigan, who helps oversee $103 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. "It's a fragile environment and the effort to make progress there is two steps forward, one step back."
The S&P 500 is down almost 3 percent over the past five days, poised for its first weekly drop since September. Financial shares led losses today, with JPMorgan Chase & Co., Bank of America Corp. and Berkshire Hathaway Inc. dropping at least 1.6 percent.
Groupon IPO
Groupon Inc. shares start trading today under the symbol GRPN after the biggest online-coupon provider raised $700 million in its initial public offering, 30 percent more than it sought and valuing the online-coupon provider at about $12.7 billion. LinkedIn Corp. sank 9.1 percent after the biggest professional-networking website reported a third-quarter loss.
The 80,000 increase in payrolls last month trailed the median forecast of economists for a gain of 95,000. Growth in the prior two months was revised up by 102,000 jobs, Labor Department figures showed.
The S&P 500 has rallied 15 percent since Oct. 3 after concern that Europe's debt crisis would trigger another recession dragged it down 19 percent from a three-year high on April 29. The rebound was spurred by better-than-estimated earnings and economic data and growing confidence that leaders would help Greece avoid default. The S&P GSCI Index of commodities has climbed 13 percent from its 2011 low on Oct. 4, while the 10-year Treasury yield has increased from a record low of 1.67 percent set on Sept. 23.
Per-share earnings beat estimates at about three-quarters of the companies in the S&P 500 that released results since Oct. 11, data compiled by Bloomberg show. Net income grew 16 percent for the group on a 12 percent increase in sales.
'Glacial Improvement'
The Citigroup Economic Surprise Index for the U.S., which measures the rate at which data is beating or trailing economists' forecasts, is at 13.6, near the six-month high of 18 reached on Oct. 31. The index has rebounded from minus 117.2 on June 3, when it showed economic data was trailing estimates by the most since January 2009.
"We see glacial improvement in the economic data," Stephen Wood, who helps oversee about $163 billion as the New York-based chief market strategist for Russell Investments, said in a telephone interview. "There's improvement, but the pace is very slow."
European Shares
The Stoxx 600 has declined 3.5 percent over the past five days, snapping a five-week winning streak. Alcatel-Lucent SA sank 15 percent as France's largest telecommunications equipment supplier cut its earnings forecast. Lafarge SA, the world's biggest cement maker, rallied 2 percent after reporting third- quarter profit that beat analysts' estimates.
Anglo American Plc climbed 1.7 percent after agreeing to buy the Oppenheimer family's 40 percent stake in De Beers for $5.1 billion, increasing its holding to as much as 85 percent.
Italy's 10-year bond yield climbed to 6.3 percent, while German yields slipped seven basis points to 1.84 percent, headed for a 33 basis-point weekly drop, the most since Bloomberg began collecting the data in 1989. Spain's yield increased eight basis points to 5.58 percent. Two-year Greek notes rose for the first time in four days, sending the yield 137 basis points lower to 100.93 percent.
Governments are awaiting further details of Europe's own week-old rescue package before they commit cash, German Chancellor Angela Merkel said on the final day of a Group of 20 summit in Cannes, France.
The MSCI Emerging Markets Index rose 1.7 percent, the most in a week. Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong jumped 3.8 percent and South Korea's Kospi Index rose 3.1 percent. Funds investing in developing-nation stocks attracted $3.5 billion in the week ended Nov. 2, the most since April, according to a Citigroup Inc. report, citing figures compiled by EPFR Global.
To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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