Stocks Rally on Unemployment-Claims Data; Irish Bonds Retreat, Oil Surges
Stocks, U.S. Futures Rise on Profit
Jin Lee/Bloomberg
Traders work on the floor of the New York Stock Exchange in New York.
Traders work on the floor of the New York Stock Exchange in New York. Photographer: Jin Lee/Bloomberg
Nov. 24 (Bloomberg) -- Bloomberg's Deborah Kostroun and Julie Hyman report on the performance of the U.S. equity market today and expectations for the holiday shopping season. U.S. stocks rose, ending a two-day decline for the Standard & Poor’s 500 Index, as jobless claims fell to the lowest level since July 2008 and consumer confidence topped projections. Measures of economically sensitive stocks, including companies that rely on consumers’ discretionary spending, led the gains in the S&P 500. Bloomberg's Jon Erlichman also speaks. (Source: Bloomberg)
Nov. 24 (Bloomberg) -- Vassili Serebriakov, a currency strategist at Wells Fargo & Co., discusses the outlook for the euro. Serebriakov, speaking with Erik Schatzker on Bloomberg Television's "InsideTrack," also talks about the U.S. dollar's status as the world's reserve currency. (Source: Bloomberg)
Nov. 24 (Bloomberg) -- Joachim Fels, chief global fixed-income economist at Morgan Stanley, talks about the sovereign debt risk facing Portugal and Spain. Fels speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Stocks, U.S. Futures Rise on Profit, Economy
Hannelore Foerster/Bloomberg
Traders work at the Frankfurt Stock Exchange in Frankfurt.
Traders work at the Frankfurt Stock Exchange in Frankfurt. Photographer: Hannelore Foerster/Bloomberg
Stocks, U.S. Futures Rise on Profit, Economy
Jochen Eckel/Bloomberg
Porsche posted a more-than sevenfold increase in operating profit.
Porsche posted a more-than sevenfold increase in operating profit. Photographer: Jochen Eckel/Bloomberg
Stocks rallied, driving the MSCI World Index up from a five-week low, after U.S. jobless claims declined to the fewest since 2008 and German business confidence improved. Yields on Treasuries and Irish bonds increased and oil surged.
The MSCI World advanced 0.8 percent at 4 p.m. in New York. The Standard & Poor’s 500 Index added 1.5 percent to 1,198.35, ending a two-day slump. Irish 10-year yields soared 45 basis points to 8.86 percent, while those on Treasuries of similar maturity jumped to the highest in four days. Oil surged the most in four months.
Fewer Americans filed for first-time unemployment benefits, and a measure of consumer confidence topped forecasts, bolstering optimism in the recovery. The Ifo institute said its gauge of Germany’s business climate jumped to a record high this month. Ireland’s debt rating was cut two steps yesterday by S&P, which signaled more downgrades should the government increase borrowing to bail out banks. North Korea’s shelling on South Korea helped drive stocks down yesterday.
“It seems things are taking off,” said Randy Bateman, chief investment officer at Huntington Asset Management in Columbus, Ohio, which oversees $13.8 billion. “For the most part, the economic numbers in the U.S. were good. There’s some degree of resolution of the Irish crisis and no further hostilities between North and South Korea. The economy is recovering, Christmas spending will certainly be better than last year.”
S&P 500 Rebound
The S&P 500 has rebounded 17 percent from its 2010 low on July 2 and is poised to gain for a third month as the Federal Reserve’s $600 billion asset-purchase plan stokes confidence in the recovery.
The Stoxx Europe 600 Index added 1 percent, ending the biggest three-day drop since August. Porsche SE jumped 6.3 percent after operating profit surged more than sevenfold. Bank of Ireland tumbled for a third day as the government prepared to inject more capital, a step that may make it the fifth Irish lender to fall under state control in less than two years.
U.S. stocks extended gains after reports showed jobless claims declined by 34,000 to 407,000 in the week ended Nov. 20. and the Thomson Reuters/University of Michigan final index of consumer sentiment increased to 71.6 this month, the highest since June. Economists projected a reading of 69.5, according to the median estimate in a Bloomberg survey.
‘Economic Momentum’
“There’s economic momentum in the U.S.,” said David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds in New York. “The jobs market is finally beginning to respond to the economic recovery.”
Separate reports from the U.S. showed household purchases advanced, durable goods orders dropped and demand for new homes unexpectedly fell.
Tiffany & Co., the world’s second-largest luxury jewelry retailer, rallied 5.3 percent to a record high after beating earnings forecasts. Amazon.com Inc. jumped 5.4 percent as Citigroup Inc. said it’s benefiting the most from online retail- sales growth. Oracle Corp., the second-biggest business software maker, advanced 2 percent after a jury said SAP AG must pay the company $1.3 billion for copyright infringement.
The difference in yield, or spread, between Ireland’s 10- year debt and bunds widened 29 basis points to 615 basis points, according to Bloomberg generic data. Portugal’s 10-year yield increased 11 basis points to 7.00 percent.
Credit-default swaps insuring Portuguese government debt slipped 6 basis points to 476 basis points, while those for Spain fell 3 basis points to 295 basis points, reversing earlier gains that brought them both to all-time highs.
Irish Bailout
Ireland’s government said it will cut spending by about 20 percent and raise taxes over the next four years as talks on a bailout of the country near conclusion.
Prime Minister Brian Cowen is rushing to finish up talks with the European Union and the International Monetary Fund on an 85 billion-euro ($114 billion) rescue as his governing coalition falls apart. The country’s labor unions plan Nov. 27 strikes to protest the cuts, which are designed to trim a deficit that will reach 32 percent of gross domestic product when the cost of bank bailouts is taken into account.
Portuguese workers walked off the job today to protest government austerity measures as the country faces its biggest strike in 22 years. German Chancellor Angela Merkel today repeated her call for bondholders to share the burden when nations can’t pay their debts.
The dollar and yen dropped against the Australian dollar and the Canadian currency strengthened against all 16 of its major counterparts.
The yen slid 1.9 percent to 82.71 versus the Canadian dollar and 1.5 percent against the Australian currency. The greenback fell 1 percent to 98.17 U.S. cents against the Australian dollar. The euro advanced 0.3 percent to 111.44 yen, coming off a two-month low.
Commodities Jump
The S&P GSCI Index of 24 commodities surged 2.4 percent as copper futures climbed for the first time in three days in New York and crude oil jumped $2.61 to $83.86 a barrel, the biggest gain since July.
Treasuries fell, wiping out gains of the last two days, as the refuge appeal of U.S. debt declined and the reports showing a strengthening economy reduced demand at a $29 billion auction of seven-year notes.
The MSCI Emerging Markets Index advanced 0.5 percent, reversing declines after the U.S. economic reports. The won closed down 0.4 percent, after falling as much as 3 percent following North Korea’s artillery fire on the South yesterday. China’s Shanghai Composite Index gained 1.1 percent, rebounding from a six-week low.
Emerging markets will “be growing” at three times the rate compared with other markets this year, said Templeton Asset Management Ltd.’s Mark Mobius.
“People always ask me if there’s going to be a double dip” recession, Mobius said at a conference in Manama, Bahrain. “My answer has always been ‘No. There will not be a double dip.’”
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Nick Baker in New York at nbaker7@bloomberg.net
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