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New York - US stocks were little changed as traders assessed earnings and a measure of consumer confidence declined. Metals climbed.
Lower forecasts at companies from Caterpillar to 3M offset better-than-estimated results at General Motors and Procter & Gamble Currencies of commodity exporters rose amid a rally in metals.
Iron ore surged by the daily limit on the Dalian Commodity Exchange, while rising steel prices in China spurred a rally from aluminum to zinc. Oil fluctuated as OPEC’s chief was due to visit Baghdad for talks aimed at resolving disagreements on output.
Equity markets have struggled for direction as investors assess the likely trajectory of interest rates, the strength of corporate profits and economic data.
US consumer confidence decreased in October from a month earlier, the New York-based Conference Board said in a report on Tuesday. More than a third of S&P 500 Index’s members are scheduled to post earnings this week, including Apple, Alphabet and Boeing.
“Third-quarter earnings look like they will be a little better than expected, which is key,” said Patrick Spencer, London-based vice chairman of equities at Robert W. Baird, which manages $151bn.
“We’ve got concerns with regard to higher rates in December. That’s what’s dampening some of the enthusiasm.”
Stocks
The S&P 500 dropped 0.1% to 2 148.93 at 15:02, while holding above its average price during the past 100 days for a second session. The gauge has been stuck in a 64-point trading range after reaching a record in August and hasn’t climbed for three consecutive sessions in more than a month.
3M slumped toward the lowest level since June, while Procter & Gamble added 3.7%. Merck & Co and Visa retreated even as their profits exceeded estimates. Under Armour Inc. plunged as its outlook renewed concerns that growth is slowing.
Miners were the biggest gainers on the Stoxx Europe 600 Index on Tuesday, poised for their highest level in 14 months, while trading near their lowest valuations relative to the broader benchmark since January.
Anglo American and Antofagasta rose at least 4.7%, tracking a rally in metal prices on optimism the global economy is becoming more resilient. The Stoxx 600 Basic Resource Index climbed 3.2%, taking its annual advance to 44%.
Receding concern about a slowdown in China, the biggest consumer of commodities, has helped boost the shares since a rout at the start of the year.
“Earnings expectations for miners had been cut back quite substantially and now they’re rebounding from quite low levels,” said Gunther Westen, who helps oversee about $28bn as head of asset allocation and fund management at Meriten Investment Management GmbH in Dusseldorf, Germany. “There could be some more room for a rally in miners given the stabilization in commodity prices.”
Commodities
The Bloomberg Commodity Index rose for a third day, spot iron ore topped $60 a metric ton for the first time since August while coal’s rally pulled steel and other raw materials in the supply chain higher.
Oil was little changed in New York after earlier rising 0.8%. Mohammed Barkindo will meet Iraq’s prime minister and oil minister, according to people familiar with the matter, after the Organisation of Petroleum Exporting Countries’ second-biggest producer said Sunday it should be excluded due to conflict with Islamic militants.
US crude stockpiles rose last week, a Bloomberg survey showed before government data on Wednesday.
“The focus stays with OPEC secretary-general’s efforts to get as many on board to cut production as possible,” said Ole Sloth Hansen, head of commodity strategy at Denmark’s Saxo Bank.
“The market will play this with continued skepticism but as long as negotiations are ongoing the selling appetite seems pretty low.”
West Texas Intermediate for December delivery was at $50.51 a barrel on the New York Mercantile Exchange. Brent for December settlement dropped 13 cents to $51.33 a barrel on the London-based ICE Futures Europe exchange, trading at a premium of 82c to WTI. The global benchmark crude fell 32c to $51.46 on Monday.
Currencies
The pickup in commodity prices sent the rand and Australia’s dollar to the biggest gains among the world’s major currencies.
The dollar reached its strongest since March against the euro amid increasing bets that the Federal Reserve will raise interest rates by year-end. The market-implied probability of a hike by mid-December rose to 73%, futures data compiled by Bloomberg show.
The greenback gained 0.2% to $1.0857 per euro, and rallied 0.6% to ¥104.78, climbing to the strongest since July.
The pound dropped before Bank of England Governor Mark Carney answers questions in the House of Lords on the economic consequences of the Brexit vote.
The offshore yuan traded near a record low as Chinese policy makers signaled they are willing to allow greater currency flexibility amid a slump in exports and an advance in the dollar.
Bonds
The benchmark Treasury 10-year note yield rose one basis point to 1.78% as of 15:32, according to Bloomberg Bond Trader data. That compares with a record low of 1.32% set in July. The 1.5% security due in August 2026 fell 3/32, or $0.94 per $1 000 face amount, to 97 17/32.
“Yields already reflect one rate hike,” said Kim Youngsung, head of overseas investment in Seoul at South Korea’s Government Employees Pension Service, which has $13bn in assets. “If you expect two hikes next year, yields will rise. We’re not sure about next year. That totally depends on the data.”
Chicago Fed President Charles Evans joined San Francisco counterpart John Williams, who last week said he supported one rate move this year and “a few” the next. Pacific Investment Management said this month US rates may rise two or three times over the period. Futures contracts show traders are banking on one move, with the odds of a second one being no more than a coin flip.
Austria sold €2bn of bonds due in November 2086 via banks, according to a person familiar with the matter.
The sale follows this year’s century bond offerings from Belgium and Ireland, as well as 50-year deals from France, Italy and Spain, as countries take advantage of historically low interest rates to issue ultra-long debt. The 100-year bond sales by Belgium and Ireland were private placements for €100m each.
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