Stocks, U.S. Futures Rise on G-20 Growth Pledge
President Barack Obama pushed his G-20 counterparts meeting in Toronto yesterday to focus on spurring growth even after leaders in the U.K. and Germany started tightening spending to cut deficits. Photographer: Norm Betts/Bloomberg
June 28 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. Treasuries rallied, pushing the yield on the 10-year note to the lowest level since April 2009, on concern the economic recovery will remain slow. U.S. stocks fell, while European equities broke a four-day losing streak. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
Treasuries rallied, pushing the yield on the 10-year note to the lowest level since April 2009, on concern the economic recovery will remain slow. U.S. stocks fell, while European equities broke a four-day losing streak.
The rate on 10-year Treasury notes slid nine basis points to 3.02 percent at 5:15 p.m. in New York. The Standard & Poor’s 500 Index lost 0.2 percent, led by commodity producers. The Stoxx Europe 600 Index advanced 1.2 percent, the most two weeks. Crude oil fell from a seven-week high on skepticism that Gulf of Mexico production will be disrupted by a tropical storm.
President Barack Obama pushed his G-20 counterparts meeting in Toronto yesterday to focus on spurring growth even as leaders in the U.K. and Germany started tightening spending to cut deficits. G-20 leaders said nations can move at their own pace to reduce budget gaps and also pledged to fulfill existing stimulus plans.
“Some parts of the economy are improving while there is still doubt about the overall direction of the recovery,” said Tom Mangan, who helps manage $2 billion as a money manager at James Investment Research Inc. in Xenia, Ohio. “The Treasury market is surprisingly resilient and that underscores the uncertainty that people have about the economy.”
Exxon Mobil Corp. lost 1.1 percent to pace declines in 35 of 38 energy companies in the S&P 500. Oil for August delivery fell 61 cents, or 0.8 percent, to settle at $78.25 a barrel on skepticism that production in the Gulf of Mexico will be disrupted by a tropical storm in the region.
Personal Spending
U.S. equity benchmarks gained earlier after government data showed personal spending rose 0.2 percent in May, twice the rate economists forecast, after being little change the prior month. Incomes climbed 0.4 and the savings rate increased to the highest level in eight months.
Tobacco and telephone companies led the market higher earlier. Altria Group Inc. and Reynolds American Inc. rallied more than 3.3 percent. The Supreme Court rejected the Justice Department’s bid for as much as $280 billion in tobacco company profits, all but ensuring the racketeering suit first pressed by former President Bill Clinton’s administration won’t result in financial penalties against Altria’s Philip Morris USA and R.J. Reynolds Tobacco Co.
Sprint Nextel Corp. rallied 6.2 percent and AT&T Inc. climbed 0.7 percent to lead telephone companies higher after President Barack Obama proposed today almost doubling the airwaves available for smartphones, laptop connections to the Internet and new wireless devices.
Quarterly Decline
The S&P 500 is headed for an 8.1 percent retreat in the second quarter, snapping a four-quarter streak of gains.
The gain in Treasuries narrowed the difference in yield with German bunds by six basis points to 44 basis points.
Treasuries climbed 5.2 percent this year and bunds returned 6.7 percent, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, as concern the economic recovery may falter amid the European debt crisis drove investors to the safest assets.
Italy faced weaker demand today at a sale of 3- and 10-year bonds worth 7 billion euros ($8.65 billion). The yield on the 10-year Italian bond climbed 4 basis points to 4.11 percent, while the French yield rose 2 basis points to 3.1 percent after that nation also sold debt.
Weighing Down
“We’ve got a lot of supply in Europe this week and that’s weighing on the market,” said Elisabeth Afseth, an analyst at Evolution Securities Ltd., a London-based broker.
Three shares gained for each that fell in the Stoxx 600 Index. PSA Peugeot Citroen rose 2.8 percent in Paris as La Lettre de L’Expansion reported that France’s biggest carmaker lifted its sales target for the DS3 model.
Most Asian stocks declined, with the MSCI Asia Pacific Index little changed. Mizuho Financial Group Inc., Japan’s third-biggest bank by market value, fell 2.6 percent in Tokyo on plans to raise as much as 857.6 billion yen ($9.6 billion) to meet new capital rules.
Russia’s Micex Index rose 1.2 percent and India’s Bombay Stock Exchange Sensitive Index advanced 1.1 percent.
Oil fell 0.8 percent to $78.25 a barrel in New York, retreating from a seven-week high. Tropical storm Alex, which is forecast to become a hurricane within two days, is on a path that keeps it away from major oil-producing areas in the Gulf of Mexico.
Copper for delivery in September lost 0.7 percent to $3.0895 a pound in New York, snapping a two-day rally, as a stronger dollar curbed demand for metals as an alternative investment.
The Dollar Index, which measures the currency against six major trading partners, climbed 0.5 percent to 85.696.
The euro slipped 0.7 percent to $1.2277 after a U.S. report showed inflation remains muted and Group of 20 nations leaders agreed on a target for cutting budget deficits.
The Federal Reserve’s preferred measure of inflation, which excludes food and fuel, was at an annualized 1.3 percent for May, government data showed, close to the 1.2 percent median estimate of economists in a Bloomberg News survey.
To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Susanne Walker in New York at swalker33@bloomberg.net.
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