S&P 500 Snaps Winning Streak; U.S. Business Activity Slows; Gold Miners Trade Similar to Junk as Bullion Sinks Below $1,200

Daily Data Flow

S&P Snaps Monthly Winning Streak (Bloomberg)
Stocks fell today, making June the first down month in more than half a year for the S&P 500. “People are hearing all these various Fed governors speak and the message they’re trying to send isn’t necessarily any clearer than what was talked about by Bernanke last week,” Robert Pavlik, chief market strategist at Banyan Partners LLC, said. “I didn’t really seen a reason to step up to be a buyer on the pullback we had and I didn’t see a lot of follow through at least on the institutional level.”

U.S. Business Activity Slows (Bloomberg)

Business activity in the U.S. cooled more than projected in June, a regional report showed today. Fiscal constraints and stagnant export markets buffeted manufacturers and caused the MNI Chicago Report’s business barometer to drop this month to 51.6, down sharply from 58.7 in May. The May reading was the highest level in more than a year but it now appears to have been an unsustainable one-month blip. A reading of 50 is the dividing line between expansion and contraction. The median forecast of 56 economists surveyed by Bloomberg was 55, so the 51.6 reading is a sizable shortfall. The Chicago index has been an outlier compared to other regional factory reports, since it surged in May when others pointed to a slump, but dropped this month as measures from the Federal Reserve Banks of New York and Philadelphia suggested a budding rebound. Manufacturing, which makes up about 12 percent of the U.S. economy, might be feeling the effects of reduced U.S. government-deficit spending due to the sequester that began in March. “It’s going to be an uneven path toward growth,” said Thomas Simons, money market economist at Jefferies & Co. Inc.

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Gold Miners Trade Similar to Junk as Bullion Sinks Below $1,200 (Bloomberg)

Barrick Gold Corp. (ABX) and Kincross Gold Corp. (K) are trading as if they’ve lost their investment-grade ratings after the price of the metal plunged 28 percent this year to the lowest level since August 2010. Barrick’s implied bond rating has deteriorated to Ba1, the highest junk rating, according to Moody’s Corp. Moody’s Investors Service’s actual rating for Toronto-based Barrick, the world’s biggest gold miner, is an investment grade Baa2. Kinross, Canada’s third-largest producer, also has an implied rating of Ba1, versus an actual rating of Baa3. Barrick Chief Executive Officer Jamie Sokalsky is cutting spending and selling assets as gold nears its first annual drop since 2000. Barrick, which had $12.5 billion of net debt as of March 31 and sold $3 billion of bonds in April to bolster liquidity, also faces higher costs at its delayed and over-budget billion-dollar Pascua-Lama gold project in the Andes. “All the gold names have been pretty much getting hammered both on the credit side and the equity side for quite some time with gold prices coming down,” said Wen Li, an analyst at CreditSights Inc.

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