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July 28, 2014 at 07:39 AM
(Bloomberg) — U.S. stocks fell, led by industrial shares, and oil retreated after data showed fewer Americans than forecast signed contracts to buy previously owned homes. Chinese shares in Hong Kong entered a bull market.
The Standard & Poor’s 500 Index slid 0.5 percent to 1,968.74 as of 10:26 a.m. in New York. West Texas Intermediate crude dropped for a third day, falling 0.9 percent. The five- year Treasury note yield rose one basis point to 1.69 percent. The Hang Seng China Enterprises Index rose 0.7 percent, while Russian stocks and the ruble slumped amid the threat of further sanctions.
The housing data suggested that the residential market is struggling to strengthen as an index of pending home sales declined 1.1 percent in June after rising 6 percent in May, figures from the National Association of Realtors showed. Goldman Sachs Group Inc. said in a report last week that equities are at risk of a temporary selloff, citing rising bond yields and high valuations.
“The markets are looking at home sales,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. It “brings back the questions about what happens to interest rates going forward,” he said. “The market is really counting on the Fed remaining accommodative.”
The U.S. central bank announces its next policy decision at the conclusion of a two-day meeting on July 30. Investors will get a reading on second-quarter growth that same day, while the government’s labor report on Aug. 1 may show employers added 231,000 jobs this month.
Treasury yields
The difference between five- and 30-year Treasuries yields narrowed to the least since 2009 as subdued inflation supported longer maturities. The Fed’s Open Market Committee will scale back its monthly asset purchases to $25 billion from $35 billion on July 30, according to economists surveyed by Bloomberg, keeping it on pace to end the program late this year.
Cummins Inc. fell 3 percent to lead industrial shares lower. AcelRx Pharmaceuticals Inc. tumbled 36 percent after saying it failed to win approval for its pain treatment Zalviso from the Food and Drug Administration. Trulia Inc. jumped 8.6 percent as Zillow Inc. agreed to purchase the company for $3.5 billion. Family Dollar Stores Inc., a discount store chain, soared 22 percent after Dollar Tree Inc. agreed to buy it. Outside the U.S., international pressure mounted on Israel to end its three-week offensive in the Hamas-controlled Gaza Strip, with President Barack Obama and the United Nations Security Council demanding an immediate truce.
Separatist war
In Europe, President Vladimir Putin faces intensifying U.S. and European sanctions aimed at forcing him to help end the separatist war in neighboring Ukraine. The Obama administration said it had satellite photos showing Russia firing across the border at Ukraine forces.
