S&P 500 Erases Monthly Advance as Apple Slumps; Dollar Climbs  

(Bloomberg) -- U.S. stocks erased their monthly gain amid thin trading volume as Apple Inc. slumped ahead of Friday's jobs report. The dollar rose, while oil fell.

The S&P 500 Index dropped from near a record high as the iPhone maker was ordered to pay a record 13 billion euros ($14.5 billion) plus interest in a European Union tax crackdown. Meanwhile, emerging-market equities are headed for their best August since 2004. The dollar rose among most of its major peers, while Treasuries were little changed as traders assessed the path of interest rates in the world's largest economy. Crude dropped below $47 a barrel before data forecast to show that gasoline stockpiles declined while crude inventories increased in the world's largest oil consumer.

American stocks have struggled to make further headway after reaching another record this month amid a spate of mixed economic data and as remarks from policy makers spurred increased speculation over the timing of the next rate move. All that Fedspeak put the spotlight on August's labor figures, which are projected to show the U.S. added 180,000 jobs, following a more robust gain in July. In the meantime, traders followed the latest developments with the EU's decision on Apple as the company has vowed to appeal.

“This isn't a positive development with the EU, but you can see it as an initial volley in what's likely to be a continuing conversation,” said Peter Jankovskis, who helps oversee $1.9 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments. “We're just waiting on the Fed, looking ahead to the September meeting and parsing every new data point in that context.”

Consumer confidence increased to an almost one-year high in August as Americans became more optimistic about the labor market, according to a report from the New York-based Conference Board on Tuesday. Fed fund futures indicate a 34 percent chance that the Federal Open Market Committee will raise rates at the September meeting, according to data compiled by Bloomberg. The probability dropped to zero in late June after the U.K. voted to leave the EU.

Fed Vice Chairman Stanley Fischer told Bloomberg Television Tuesday that rate increases will be data dependent without giving a specific timeline. He said that the U.S. is close to full employment even as the dollar has strengthened, and while there's some pessimism about the pace of expansion, “that problem is largely about productivity growth, something which is very hard to control by policy makers. It depends enormously on what private individuals are doing in their companies, and it's very slow at the moment.”

Stocks

The S&P 500 dropped 0.4 percent at 3:05 p.m. in New York as trading volume was 11 percent below the 30-day average. The gauge is down 0.1 percent in August, after being on pace for the longest monthly advance since 2013. Apple slumped toward the lowest since Aug. 2. Appeals at EU courts can take years to finalize, meaning that the final amount the company may have to pay won't be known until then.

Abercrombie & Fitch Co. sank 21 percent after slow sales at flagship locations weighed on its latest results and outlook. Mondelez International Inc. rallied after saying it's walking away from takeover discussions with Hershey Co. two months after its $23 billion bid was rejected by the chocolate maker. Potash Corp. of Saskatchewan Inc., the world's second-largest producer of its namesake fertilizer, and Agrium Inc. surged after both companies confirmed they are in talks about a merger of equals as they battle falling prices and a decline in spending from farmers.

European stocks climbed, extending monthly gains, amid increasing confidence in the global economy and as a weaker euro boosted exporters. The Stoxx Europe 600 Index rose 0.5 percent, with almost all of its industry groups rising. Commodity producers bucked the trend as metal prices fell and Citigroup Inc. analysts turned bearish on mining shares.

The MSCI Emerging Market Index rebounded from a three-week low. It's risen 2.6 percent since July 31 as of Monday's close, outperforming the MSCI World Index of developed markets' 0.2 percent return. Developing countries that are lagging behind are mostly in the Middle East and Africa. Brazilian shares are set for their longest monthly advance since April.

Currencies

The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, advanced 0.6 percent. The U.S. currency strengthened 0.4 percent to $1.1142 per euro, and 1.1 percent to 103.01 yen.

Investors' sentiment on the dollar has oscillated in recent weeks on speculation about the Fed's tightening path after it raised rates in December for the first time since 2006. The greenback has trimmed its loss this year to 3.6 percent.

“The dollar looks pretty bid across the board,” said Kamal Sharma, a London-based foreign-exchange strategist at Bank of America Corp., in an interview on Bloomberg Television. “Having said that, we've got enough event risk in September with the likes of the European Central Bank, the Bank of Japan and also not forgetting this week's nonfarm payrolls number.”

South Korea's won rose 0.5 percent versus the dollar, the best performance among 16 major currencies. Brazil's real declined amid speculation banks were seeking to weaken the currency before the monetary authority determines a key rate used in settling some financial contracts. That's overshadowed optimism that a new government will pull the country out of recession as President Dilma Rousseff's impeachment trial heads into its final stages.

Bonds

The yield on U.S. government debt due in a decade increased one basis point, or 0.01 percentage point, to 1.57 percent, after dropping seven basis points on Monday.

Comments from central bankers during and in the run-up to the Kansas City Fed's annual symposium last week in Wyoming have split the market. Treasury bull Morgan Stanley predicts the Fed will forgo raising interest rates next month, while Goldman Sachs Group Inc. and Mitsubishi UFJ Securities Holdings Co. saw them as hawkish enough to raise the odds of action next month.

The August payrolls data have missed the median of economists' estimates in each of the past five years, JPMorgan Chase & Co. analysts led by Jay Barry in New York wrote in a report. The policy-setting Federal Open Market Committee meets next on Sept. 20-21 in Washington. The meeting will be followed by a press conference with Yellen and by a fresh set of economic projections by policy makers.

Commodities

Crude futures declined for a second day in New York, trading between $46-$48 over the past week. Inventories of gasoline probably slid by 1.25 million barrels last week and crude stockpiles may have climbed by 1.5 million barrels, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Market volatility will persist while demand and supply rebalance, according to executives gathering at an oil conference in Norway. The dollar advanced, curbing the appeal of commodities as an investment.

“There is a whole slew of indications on the fundamental side that we should effectively be lower,” Harry Tchilinguirian, head of commodities research at BNP Paribas SA in London, said by telephone. “In the absence of any new supply disruption and in the absence of any progress in the supposed producer dialogue that will take place in Algiers, the market could easily retrace a few dollars.”

West Texas Intermediate for October delivery fell 1.3 percent to $46.35 a barrel on the New York Mercantile Exchange.

Gold futures for December delivery slid 0.8 percent to settle at $1,316.50 an ounce at 1:44 p.m. on the Comex in New York, heading for the first August decline since 2009. In the decade to 2015, bullion added 2.2 percent on average during August, the best month after January.