The Standard & Poor’s 500 Index erased a February gain Monday, despite a rally in crude oil, as a two-week rebound faltered in the month’s lightly traded final session.
The S&P 500 fell 0.8 percent to 1,932.03 at 4 p.m. in New York, extending its monthly losing streak to three, the longest in more than four years. It closed 0.4 percent lower for February. Afternoon declines accelerated as the gauge fell below its average price during the past 50 days. The benchmark hasn’t declined on a day when oil climbed that much since Nov. 23.
The S&P 500 halted a two-day advance on Friday after signs of firming inflation spurred speculation interest rates may rise sooner than previously expected. A bank-fueled rebound of more than 6.5 percent since a Feb. 11 through last week had briefly erased the benchmark’s losses for the month.
Investors are also watching economic releases to gauge the trajectory of rate increases, before the Federal Reserve’s next decision on March 16. Data today showed contracts to purchase previously owned homes unexpectedly dropped in January by the most in two years. A February gauge on manufacturing in the Chicago area today also fell more than forecast.
After last week’s batch of data, traders raised their bets for further Fed rate increases this year. The probability of a June boost is 32 percent, up from 27 percent a week ago, while odds of a December move reached almost 54 percent after slipping to 11 percent at the height of this month’s stock selloff on Feb. 11.
The rally in U.S. stocks evaporated in the final hour of trading as speculation that the Federal Reserve will hold off on raising interest rates gave way to renewed concerns about the strength of the American economy. The dollar fell and Treasuries rose.
The Standard & Poor’s 500 Index capped a second day of volatile trading virtually where it began, after the gauge erased an advance that topped 1.5 percent at its height. Fed Chair Yellen signaled financial-market volatility could delay rate increases as the central bank assesses the turmoil’s impact on domestic growth. Ten-year Treasury yields slipped to 1.70 percent after an auction drew the lowest yield since 2012. The dollar dropped to the lowest since November and crude fell to a three-week low.
Yellen’s testimony before Congress did little to quell market volatility, as the central banker said the Fed still expects to raise rates gradually while making it clear that continued market turmoil alter forecasts. She highlighted uncertainty over the pace of China’s growth and the related rout in commodities, concerns that have roiled financial markets throughout the year and twice pushed global shares to the brink of a bear market.
Markets buckled earlier this week as Deutsche Bank sparked concern European bank creditworthiness was weakening as oil’s rout took crude below $ 28 a barrel. While central banks from Japan to Europe have signaled additional stimulus is at the ready, market volatility has intensified in recent weeks. Yellen’s acknowledgment that the turmoil has clouded global growth added to anxiety.
The S&P 500 was little changed at 4 p.m. in New York after rising as much as 1.5 percent. The Dow fell 0.6 percent as Disney shareholders overlooked a record quarter for sales and earnings at and focused on flagging profits at its ESPN sports network. Bank shares fell fastest in the final hour of trading as sentiment shifted.