U.S. Stocks Fall, Europe Equities Erase Gain; Metals Drop

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gsr-021459U.S. stocks fell from near a record and European stocks erased gains as investors weighed economic data and developments inUkraine. U.S. Treasuries pared declines and copper extended a selloff.

The Standard & Poor’s 500 Index slumped 0.4 percent at 12:20 p.m. in New York, reversing an earlier gain of 0.3 percent. Ten-year Treasury yields lost one basis point to 2.77 percent. The Europe Stoxx 600 Index was little changed, while Russia’s Micex slid 2.3 percent in the first day of trading this week. Spanish government bonds fell, pushing the 10-year yield up from near an eight-year low. Copper plunged 2.3 percent for a third day of losses to the lowest since July 2010. Oil dropped a second day on concern that U.S. supplies rose.

Russia showed no signs of yielding in the Crimean standoff as Ukraine bolstered its defenses. Germany’s current account surplus came in higher than economists’ estimates as exports jumped more than projected, while data showed U.K. factory production rose more than forecast. Japan’s Topix index capped its fifth advance in six days as the Bank of Japan maintained a pledge to expand the monetary base.

“The equity market is going to make continued progress in a two steps forward, one step back kind of progression,” Jim Russell, who helps oversee $115 billion as a senior equity strategist for U.S. Bank Wealth Management, said by phone. “We’re still evaluating how much of the economic weakness is weather-related and how much of it is legitimate.”

U.S. Stocks

Nine of the 10 main industries in the S&P 500 dropped today, with phone and energy stocks losing at least 0.9 percent to pace losses. The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, added 1.8 percent.

J.C. Penney Co. jumped 8.4 percent after Citigroup Inc. raised its recommendation on the retail chain. Urban Outfitters Inc. dropped 4.5 percent after saying it remains cautious about its performance in the first quarter.

The S&P 500 rallied 4.3 percent in February after Federal Reserve Chair Janet Yellen said the economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases. Three rounds of Fed stimulus have helped push the S&P 500 up 177 percent from a 12-year low, as U.S. equities begin the sixth year of a bull marketthat started March 9, 2009.

The Fed is trying to determine how much of the recent economic cooling has been due to the weather. U.S. employers added more workers than estimated in February, a Labor Department report showed last week. Other reports indicated manufacturing expanded faster than projected last month, while consumer spending rose more than estimated in January.

Bond Yields

U.S. 10-year Treasury yields fell one basis point to 2.77 percent, reversing earlier gains.

The Stoxx Europe 600 Index fell for a third day, sliding 0.1 percent to a one-week low after earlier rising as much as 0.6 percent. A gauge of carmaker and auto-parts stocks jumped as much as 1.2 percent after a report showed German exports increased more than forecast in January.

Volkswagen AG, Europe’s biggest automaker, gained 1.2 percent. Its Audi AG unit delivered more cars than Bayerische Motoren Werke AG’s namesake brand in the first two months of the year, becoming the world’s best-selling luxury-auto nameplate.

Yields on Spanish bonds rose two basis points to 3.32 percent.

“Investors can be more confident if the core of Europe is doing well,” said Carsten Hilck, who oversees about $6.9 billion at Union Investment Privatfonds GmbH in Frankfurt. “Germany is still a very strong exporter and the economy is on the right track. Investors can get very nervous with geopolitical risk but there’s a lot of liquidity to stabilize the market as soon as prices come down.”

Micex Slide

Russia’s Micex has declined 9.4 percent this month as President Vladimir Putin tightened his grip on Ukraine’s Crimea region. The ruble has weakened 1.5 percent in the period, the worst performer after the Chilean peso among 24 emerging markets tracked by Bloomberg.

In addition to testing its military’s combat readiness, Ukraine may mobilize 20,000 people to protect borders, Interior Minister Arsen Avakov said today. Russia has vowed to defend the ethnic Russians who dominate the Crimean peninsula and has rejected the legitimacy of the new cabinet in Kiev after an uprising unseated Ukraine’s Moscow-backed leader.

Russia canceled its fifth ruble bond auction this year as the escalating tension in Crimea drives up the nation’s borrowing costs. The yield on Russia’s February 2027 bond rose 5 basis points to 8.91 percent after surging 50 basis points last week.

The MSCI Emerging Markets Index added 0.1 percent, rebounding from a 1.2 percent drop yesterday after data showed China’s exports slowed, fueling concern that the world’s second-largest economy was moderating.

Asia Stocks

The MSCI AC Asia Pacific Index gained 0.3 percent after declining 1.1 percent yesterday. The Topix added 0.5 percent to 1,233.21 at the close of trading in Tokyo as the central bank said it plans to expand the monetary base at a pace of 60 trillion yen ($581 billion) to 70 trillion yen per year.

Ukrainian bonds rose, with the yield on the April 2023 Eurobond dropping 2 basis points to 10.36 percent. The hryvnia was little changed at 9.23 against the dollar.

Currency volatility, a gauge of expected price swings, fell to the lowest in almost 15 months, as traders assessed the standoff in Ukraine.

Deutsche Bank AG’s Currency Volatility Index, based on three-month implied volatility on nine major currency pairs, declined 2.1 percent to 7.12 percent, the lowest level since December 2012.

The Swiss franc dropped against all but four of its 16 major peers. It declined 0.1 percent to 87.84 centimes per dollar after climbing to 87.57 centimes on March 7, the strongest since October 2011.

The Bloomberg Dollar Spot Index lost 0.1 percent after rising for two days.

West Texas Intermediate for April delivery dropped 45 cents, or 0.4 percent, to $100.67 a barrel on the New York Mercantile Exchange. Stockpiles are forecast to have gained 2 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report tomorrow.