Dollar Gains With U.S. Stocks on Economic Data as Oil, Gold Slip

August 29, 2013

LONDON (Aug. 29)    The dollar gained with U.S. stocks as a report showed the American economy grew more than forecast last quarter. Oil slid from a two-year high while European shares rose for the first time in four days.

The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, climbed 0.5 percent and the Standard & Poor’s 500 Index increased 0.4 percent at 3:04 p.m. in New York. The Stoxx Europe 600 Index added 0.8 percent as Vodafone Group Plc jumped 8.2 percent to an 11-year high. Crude slipped 1.2 percent and gold dropped 0.4 percent. The yield on 10-year Treasuries fell two basis points to 2.75 percent, reversing an earlier gain following a U.S. auction of notes.

U.S. gross domestic product rose at a 2.5 percent annualized rate, up from an initial estimate of 1.7 percent, Commerce Department figures showed today. The prospect of an imminent attack on Syria faded as U.K. Prime Minister David Cameron, the U.S.’s top ally, struggled to win parliamentary backing for military strikes that critics said echoed the push to war in Iraq.

“We’re back to focusing on economic data, specifically out of the U.S. and Europe, and the Fed tapering, as the market is coming around to believe the Syrian conflict poses only a short- term risk,” said Manish Singh, who helps oversee $2 billion as head of investment at Crossbridge Capital in London. “I am of the opinion that tapering will happen in September, regardless of data.”

The 2.5 percent growth in GDP compared with a 2.2 percent median estimate of 79 economists surveyed by Bloomberg. The improvement shows the world’s largest economy gaining momentum after a drought, Superstorm Sandy and budget battles in Washington stalled growth in the last three months of 2012. Recent data have shown the labor market is gaining strength while home prices rise, bolstering household finances.

Jobless Claims

A separate report today showed the number of Americans filing applications for unemployment benefits fell more than forecast last week.

The S&P 500 has fallen 2.6 percent in August amid speculation the Federal Reserve will pare stimulus measures and concern the U.S. will take military action against Syria. The benchmark index has retreated 4 percent since its last record on Aug. 2.

Minutes of the Fed’s July meeting released on Aug. 21 showed policy makers supported cuts to the central bank’s bond- buying program this year if the economy improves in line with its forecasts. Fed stimulus helped push the S&P 500 up as much as 153 percent from its March 2009 low, data compiled by Bloomberg show.

Guess Gains

Among stocks moving today, telephone and consumer- discretionary shares climbed at least 0.8 percent to lead gains in eight of the 10 main industry groups in the S&P 500. Guess? Inc. surged 13 percent as the clothes maker reported second- quarter profit that topped estimates and boosted its full-year forecast.

Trading volume in S&P 500 stocks was 19 percent below the 30-day average at this time of day, two sessions before the Labor Day holiday weekend. Trading on U.S. exchanges is poised for the second-slowest month in at least five years, according to data compiled by Bloomberg. An average of about 5.5 billion shares changed hands each day this month. That’s about 80 million shares more than last August.

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