U.S. Stocks Halt Rally as Dollar Resumes Advance: Markets Wrap

(Bloomberg) -- U.S. stocks halted a three-day rally, while the dollar surged amid concern a trade deal with China remains elusive. The pound fell as the Brexit saga rumbled on.

The S&P 500 spent most of the session fluctuating between gains and losses in thin trading, before a slight fade at the close. News that a meeting to end the trade war with China won’t happen this month weighed on sentiment. The index had jumped 2.5 percent in the prior three days, pushing past the 2,800 level that had capped prior advances. Consumer and material shares were the worst performers Thursday. Bank and technology shares led gains.

“Most analysts believe a China trade deal is fully priced into the markets, which can mean only one thing -- if there’s a wild card lurking, it would be the emergence of a negative surprise,” Greg Valliere, the chief U.S. policy strategist at AGF Investments, wrote in a note. “While we expect a signing ceremony by later in the spring, the idea that a final pact can be completed by the end of this month is optimistic, to say the least.”

The yuan weakened. Treasuries were steady and the dollar gained, holding those moves as data showed U.S. jobless claims rose to a four-week high. The Stoxx Europe 600 Index climbed, with shares in the U.K. also rising after a night of voting that saw the British government once again defeated in Parliament over Brexit. Equities rose in Hong Kong, while they slid in China after industrial production numbers missed expectations.

Investors have a lot to grapple with just now. U.S. stocks had gained for three straight days this week as economic data came in neither too hot nor too cold, while traders in Europe on Thursday seemed to be shrugging off more warning signs from the region -- perhaps because of hopes Brexit can be delayed or derailed. Figures suggesting China’s slowdown deepened in the first two months of the year added to reasons for caution following this quarter’s rebound in Asian shares.

The pullback in sterling follows a big rally on Wednesday. U.K. lawmakers have rejected the idea of tearing the country out of the EU with no agreement, and Prime Minister Theresa May is said to be planning to seek an extension to the March 29 Brexit deadline lasting about two months.

Elsewhere, gold fell and copper was dragged down by the Chinese data. Emerging-market shares edged lower.

Here are some of the key events coming up:

• China’s National People’s Congress is set to wrap up on Friday.
• Bank of Japan Governor Haruhiko Kuroda will speak on Friday, after he and his board conclude their discussions on monetary policy.

And these are the main moves in markets:

Stocks

• The S&P 500 was fell 0.1 percent to 2,809 as of 4 p.m. in New York.
• The small-cap Russell 2000 Index lost 0.2 percent.
• The Stoxx Europe 600 Index climbed 0.8 percent.
• The MSCI Asia Pacific Index fell 0.3 percent.
• The MSCI Emerging Market Index declined 0.3 percent.

Currencies

• The Bloomberg Dollar Spot Index advanced 0.3 percent, the first gain in a week.
• The euro declined 0.2 percent to $1.1306, the first retreat in a week.
• The British pound lost 0.4 percent to $1.3279.
• The Japanese yen decreased 0.5 percent to 111.744 per dollar.

Bonds

• The yield on 10-year Treasuries rose one basis point to 2.63 percent.
• The two-year rate was little changed at 2.46 percent.
• Germany’s 10-year yield gained two basis points to 0.086 percent.
• Britain’s 10-year yield rose three basis points to 1.22 percent.

Commodities

• The Bloomberg Commodity Index fell 0.2 percent.
• West Texas Intermediate crude gained 0.6 percent to $58.58 a barrel.
• Gold futures slumped 1 percent to $1,296.40 an ounce.

--With assistance from Sophie Caronello, Cormac Mullen, Adam Haigh, Eddie van der Walt and Brendan Walsh.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editor responsible for this story: Samuel Potter at spotter33@bloomberg.net

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