On fears that European and US bond sell-offs could resume, New York stocks lost ground. At the same time, negative signs that US retail sales have missed targets – after a weak first quarter – and that the Federal Reserve may hold back on its first rate increase since 2006 generated the dour opinion that investors are in “a news vacuum with corporate savings finished”. Waiting on the Fed to tighten, or not, in the midst of “bad data” led to a two-week high in gold prices – while oil prices fell slightly as supplies continued to flow. – Peter Wilhelm
By Stephen Kirkland & Jeremy Herron

(Bloomberg) — Along with Treasuries and European bonds, US stocks pared gains amid concern that a fixed-income selloff may resume. The dollar fell after retail sales missed forecasts, bolstering signs the economy is decelerating.
Standard & Poor’s 500 Index fell less than 0.1 percent at 11 a.m. in New York, erasing a gain of 0.5 percent. The yield on 10-year Treasury notes was little changed after dropping as much as six basis points, while German 10-year bunds resumed declines following earlier gains. The Bloomberg Dollar Spot Index lost 0.7 percent. US oil fell after topping $61 a barrel, while gold climbed to a two-week high.
Debt sales in Italy and Germany briefly provided relief from a fixed-income rout, before investors resumed selling bonds in late European trading. Euro-area growth quickened in the first quarter amid a weakened currency and European Central Bank (ECB) stimulus. Sales at US retailers were little changed in April, starting the second quarter on a weak note after economic growth slowed in the first three months of the year.
“We’ve been at the mercy of the bond market because of a news vacuum with corporate earnings finished,” said Kelly Bogdanov, the San Francisco-based vice president and portfolio analyst at RBC Wealth Management. “Equities have been remarkably resilient in the face of yields and uncertainty about when the Fed will pull the trigger. The fact that we’re up near these highs is a positive for the stock market.”
The dour tone of the retail report comes as the Federal Reserve assesses the timing of its first interest-rate increase since 2006. The Bloomberg dollar gauge slid to a three-month low as the greenback declined against all but one of its major peers on concern that disappointing economic readings will prompt the Federal to hold off.
The S&P 500 fell for the past two days after jumping the most since March on Friday amid data that showed hiring bounced back in April from a winter slowdown. The gauge is 0.7 percent below its April 24 record.
“We had a couple down days and now all this bad data just pushes out the Fed longer to tighten,” Frank Ingarra, head trader at Greenwich, Connecticut-based Northcoast Asset Management LLC, said by phone. Northcoast has $3 billion under management. “It’s going to be range-bound trading until we get something that will break us through, either the Fed saying they won’t tighten or some phenomenal economic data.”
Merger activity boosted US equities Wednesday, as Williams Cos agreed to buy the 40 percent of Williams Partners LP it doesn’t already own for $13.8 billion, simplifying its corporate structure. Danaher Corp. will purchase water-systems maker Pall Corp. for $13.8 billion and said it will split itself into two publicly traded companies.
The yield on the benchmark 10-year note dropped before the US sells $24 billion of the securities at an auction today. The yield touched 2.36 percent Tuesday, the highest since Nov. 14, and up from as low as 1.80 percent in April.
German bunds have been at the epicentre of a month-long selloff in fixed-income, as the yield climbed as high as 0.78 percent on May 7, from a record low 0.049 percent on April 17.
“On the European side we have had some good numbers and on the other side people have been disappointed in the performance of US data,” said Sonja Marten, a currency strategist at DZ Bank AG in Frankfurt.
The Stoxx Europe 600 Index fell 0.1. It earlier rose as much as 1.1 percent as data showed the euro area’s economy expanded at its fastest pace in almost two years.
UBS AG lost 1.2 percent. The U.S. Justice Department will rip up its agreement not to prosecute the Swiss lender for rigging benchmark interest rates, a person familiar with the matter said.
The MSCI Emerging Markets Index rose 0.8 percent as benchmark gauges in Russia, India, Indonesia, South Africa, South Korea and Thailand gained at least 0.6 percent.
The Shanghai Composite Index dropped 0.7 percent. The gauge had rallied 6.8 percent in the past three days, the best three-day performance since January, fuelled by the central bank’s third interest-rate cut in six months.
US crude held its advance after a government report showed supplies fell for a second straight week. West Texas Intermediate added 0.5 percent to $61.01 a barrel. Brent oil rose 1.4 percent to $67.81.
Gold rose to a two-week high as stalling retail sales revived speculation that a sputtering economy will spur a delay in rate increases. Futures for June delivery rose 1.8 percent to $1,213.40 an ounce in New York. Earlier, the price reached $1,214.60, the highest for a most-active contract since April 28.