U.S. Stocks Drop Most Since October, Dollar Gains: Markets Wrap

(Bloomberg) -- U.S. stocks fell the most since mid-October in light holiday trading, with the Dow Jones Industrial Average failing anew in its quest for 20,000. The dollar traded at its strongest level in more than a decade and oil closed at a 17-month high.

The blue-chip equity index climbed within 30 points of the round-number milestone before retreating below 19,900 in trading 33 percent below the 30-day average. The S&P 500 Index suffered its worst loss since Oct. 11 as data showed higher mortgage rates led to a drop in pending home sales. Crude capped its longest rally in seven years and is at the highest since July 2015. Demand from indirect bidders for five year Treasury notes reached a record in Tuesday’s auction of $34 billion.

Trading has been thin across the globe during the last week of the year, with volumes in crude oil, equities and currencies all below average. Investors sold U.S. equities at the fastest rate since before Donald Trump’s surprise election, trimming a post-election rally that took major indexes to all-time highs. The dollar sot to the highest level in more than a decade on speculation the incoming president will boost public spending.

Stocks

• The S&P 500 Index fell 0.8 percent to 2,249.96 at 4 p.m. in New York. It’s up 10 percent in 2016 after adding 2.3 percent so far this month. The Dow dropped 110.88 points to 19,834.16.
• Real-estate shares led declines in the S&P 500, as all 11 main groups slipped.
• The Stoxx Europe 600 Index rose 0.3 percent and the FTSE 100 Index in London closed at a record.
• Commodity stocks were the biggest gainers among industry groups, with BHP Billiton Ltd. and Fresnillo Plc up at least 4 percent. 
• Hong Kong’s Hang Seng Index added 0.8 percent, rebounding from a five-month low, as banks led a rally among Chinese companies. The Hang Seng China Enterprises Index gained 1.3 percent, the most in a month, and the Shanghai Composite Index lost 0.4 percent.

Commodities

• Crude futures rose 0.3 percent to settle at $54.06 a barrel in New York. 
• Prices are set to recover next year as production cuts help rebalance an oversupplied market, Saudi Arabia’s Energy Minister Khalid Al-Falih said last week. OPEC and 11 nations from outside the group including Russia have agreed to trim about 1.8 million barrels a day from January.
• Gold futures rose for a third day, adding 0.2 percent to settle at $1,140.90. The metal has been rebounding from an 11-month low.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2 percent, trading near the highest level in more than a decade.
• The New Zealand dollar rose 0.5 percent to 69.22 U.S. cents, extending a rally from a near seven-month low on Dec. 23.
• The yen rose 0.2 percent to 117.19 per dollar after falling 0.3 percent Tuesday.
• Turkey’s lira retreated 0.6 percent as the Anadolu news agency said the country agreed with Russia on a Syria truce plan.

Bonds

• The 10-year Treasury yield fell five basis points to 2.51 percent. The five year yield stood at 2 percent.
• U.K. gilts advanced as markets in Britain reopened after the public holiday. Yields on 10-year gilts fell four basis points to 1.301 percent, the lowest since Nov. 10. 
• The advance in German bunds lagged behind those in peripheral bonds from Italy and Spain. The yield on the benchmark 10-year bund fell one basis point to 0.19 percent, while those on similar-maturity Spanish notes fell four basis points.

--With assistance from Namitha Jagadeesh and Kelly Gilblom To contact the reporter on this story: Jeremy Herron in New York at jherron8@bloomberg.net. To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Rita Nazareth