U.S. Stocks Extended Weekly Gain; Gold Rises
U.S. stocks added to the best weekly gain in a month as results at Caterpillar Inc. (CAT) and Goodyear Tire & Rubber Co. (GT) beat estimates. The Dollar Index extended its worst monthly loss since September amid bets the Federal Reserve will maintain stimulus as the economy slows.
The Standard & Poor’s 500 Index rose 0.2 percent to 1,363.61 at 4 p.m. in New York on the final session of a 2 percent weekly gain and a 2.9 percent monthly advance. The Dollar Index, which gauges the currency against six major peers, fell for a ninth day in its longest slump in four years. China’s yuan strengthened beyond 6.5 per dollar for the first time since 1993. Gold futures reached a record $1,569.80 an ounce and oil added to an unprecedented eighth straight monthly advance.
Caterpillar raised its forecast amid a surge in revenue in developing countries and Goodyear posted record sales. Lower- than-estimated data on U.S. business activity and consumer confidence underscored the Fed’s assessment this week that it will probably keep interest rates near zero for an extended period to bolster a “moderate” economic expansion.
“The earnings season has been really good so far,” said Liam Dalton, president of Axiom Capital Management Inc. in New York, which oversees $1.3 billion. “The numbers are very strong from the perspective of bottom-line beats and relative to expectations. It adds to all the stimulative forces we have in place and which keep pushing stocks higher.”
Earnings-per-share have exceeded analysts’ estimates at about three-quarters of the 298 companies in the S&P 500 that have reported results since April 11, Bloomberg data show. Net income has grown 21 percent for the group as sales increased 10 percent.
Caterpillar, the world’s largest construction-equipment maker, climbed 2.5 percent after reporting first-quarter profit of $1.84 a share, more than the $1.31 average estimate in a Bloomberg survey. Goodyear Tire surged 12 percent to $18.15, the highest price since August 2009.
The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 67.6 in April from 70.6 the prior month, trailing the median forecast in a Bloomberg News survey of economists for a decline to 68.2. The Thomson Reuters/ University of Michigan final index of consumer sentiment rose to 69.8 from March’s 67.5 reading that was the lowest since November 2009. The gauge was projected to increase to 70, according to the median economist estimate.
Separately, U.S. consumer spending rose in March, with purchases increasing 0.6 percent after a revised 0.9 percent gain the prior month that was higher than previously estimated, Commerce Department figures showed.
The Dollar Index slipped 0.1 percent to 73, extending its monthly decline to 3.8 percent. The U.S. currency slipped 0.1 percent to $1.4811 per euro. The yuan closed up almost 0.2 percent to 6.491 per dollar.
“Clearly with the Fed on hold and the economy just moving along slowly and the deficit so large, it’s a tough combination,” Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, said in a Bloomberg Television interview.
Treasuries completed their biggest monthly return since August as cooling economic growth and the Fed’s commitment to sustain monetary stimulus spurred demand for the safety of government debt.
Ten-year yields slipped two basis points to 3.29 percent, the lowest in more than a month. They fell 18 basis points in April in the first monthly decrease since sliding 44 basis points in August.
Yields on two-year notes lost two basis points to 0.60 percent and decreased 22 basis points, or 0.22 percentage point, in April for the biggest monthly drop since January 2010. Bernanke said this week that the central bank will finish buying $600 billion of debt in June, as planned, while holding interest rates near zero, where they’ve been since December 2008.
European confidence in the economic outlook declined and inflation accelerated to the fastest pace in two and a half years, while South Korea’s output climbed at the slowest pace in six months, government reports showed today.
The Stoxx Europe 600 Index capped the biggest monthly increase this year, rising 2.9 percent. SSAB Svenskt Staal AB jumped 9.7 percent today as the world’s largest supplier of high-tensile steel reported earnings that topped projections.
Crude for June delivery rose $1.07, or 1 percent, to $113.93 a barrel on the New York Mercantile Exchange and gained 6.8 percent in April. Cotton, corn and wheat climbed more than 3 percent to lead the S&P GSCI Index up 1 percent.
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