Stocks Gain on Jobs Growth; Euro Falls on Greek Debt Concern
Commodities Tumble as Oil, Silver Drop
Susana Gonzalez/Bloomberg
A worker monitors unprocessed silver as it moves along a conveyor belt at the Fresnillo Plc silver mine in Zacatecas, Mexico.
A worker monitors unprocessed silver as it moves along a conveyor belt at the Fresnillo Plc silver mine in Zacatecas, Mexico. Photographer: Susana Gonzalez/Bloomberg
May 6 (Bloomberg) -- Barton Biggs, managing partner at hedge fund Traxis Partners LP, talks about the outlook for the global economy, the U.S. stock market and his investment strategy. Biggs speaks with Mark Crumpton, Dominic Chu, Julie Hyman and Adam Johnson on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
May 6 (Bloomberg) -- Rick Fier, a trader at Conifer Securities LLC, talks about the performance of the U.S. stock market. Fier also discusses the 2010 "flash crash" and the U.S. economy. He speaks with Carol Massar, Matt Miller and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)
May 6 (Bloomberg) -- Nick Moore, chief commodities strategist at RBS Global Banking & Markets in London, discusses the outlook for commodities. Moore speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
May 6 (Bloomberg) -- Daragh Maher, deputy head of global foreign exchange at Credit Agricole SA, talks about currencies and the outlook for central bank policy. Maher speaks with Scarlet Fu on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)
May 5 (Bloomberg) -- Helen Lau, an analyst with UOB Kay Hian Ltd., talks about her investment strategy for China's coal producers. Lau also discusses China's coal supply. She speaks in Hong Kong with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
U.S. stocks rose, halting a four-day slump for the Standard & Poor’s 500 Index, as faster-than- forecast growth in jobs bolstered optimism in the economy. Equities trimmed gains as the euro and commodities fell amid concern Greece may need to restructure its debt.
The Standard & Poor’s 500 Index climbed 0.4 percent to 1,340.20 at 4 p.m. in New York after surging as much as 1.4 percent. The euro decreased 1.3 percent to $1.4351, the lowest since April 19. The S&P GSCI Index of commodities fell 0.8 percent and lost 11 percent over the past five days, its worst weekly plunge in more than two years. Oil plunged 2.6 percent to $97.18 a barrel and silver capped its worst week since 1975.
Stocks rallied in morning trading and commodities rebounded from their worst tumble since 2009 after government data showed the biggest increase in payrolls since May 2010. Equities pared their advance, commodities turned lower and the euro plunged as two European officials familiar with the matter said finance officials were meeting in Luxembourg for unscheduled talks that may focus on plans to restructure Greece’s debt.
“The jobs report showed that we are in an economic recovery,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has about $110 billion in client assets. “We’re seeing decent profits. That’s lifting stocks. Still, we’re seeing some knee-jerk reaction in the currency market. The dollar gets a bid as a haven when there’s concern about risks. As investors bid the dollar, they sell other things, like commodities and stocks.”
Earnings Season
The S&P 500 trimmed its weekly decline to 1.7 percent, its worst since March. DuPont Co. and American Express Co. rose more than 1.3 percent to help lead gains in 25 of 30 companies in the Dow Jones Industrial Average. Kraft Foods Inc. rallied 2.1 percent after profit topped analysts’ estimates. Earnings have exceeded projections at 73 percent of the 416 companies in the S&P 500 that posted results since April 11, Bloomberg data show.
The VIX, as the Chicago Board Options Exchange Volatility Index is known, dropped as much as 11 percent today before concern about a potential Greek-debt restructuring drove the measure up 1.1 percent to 18.40 amid renewed demand for options to protect against losses in stocks. The VIX climbed 25 percent this week, the most in a year.
Today’s advance in equities was triggered by Labor Department data showing payrolls increased by 244,000 workers last month and jobs growth in March and February was revised higher. The growth in jobs exceeded the 185,000 median estimate in a Bloomberg News survey of economists. Excluding government jobs, employment jumped by 268,000, the most in five years. The jobless rate rose to 9 percent, the first gain since November.
Canadian Stocks
The S&P/TSX Composite Index of stocks climbed 0.8 percent in Toronto after Canada added almost three times more jobs than economists forecast in April and the unemployment rate declined. Employment rose by 58,300, Statistics Canada said. The jobless rate fell to 7.6 percent from 7.7 percent. Economists forecast no change in unemployment and 20,000 new jobs.
In Europe, Royal Bank of Scotland Group Plc (RBS), Britain’s biggest government-owned lender, rose 5.6 percent as Chief Executive Officer Stephen Hester forecast a return to profit this year. ThyssenKrupp AG, Germany’s largest steelmaker, jumped 8 percent on plans to sell or spin off units. DnB NOR ASA (DNBNOR), the Nordic region’s second-largest bank, fell 5.3 percent after profit declined. Belgacom SA sank 5.1 percent as the biggest phone company in Belgium lowered its forecasts.
Emerging Markets
The MSCI Emerging Markets Index decreased 0.1 percent to the lowest level since March 30. Turkey’s benchmark stock index fell 1.6 percent after Citigroup Inc. cut earnings estimates for lenders, citing four central bank increases in reserve requirements since December. India’s Sensitive Index gained 1.7 percent as this week’s drop in commodity prices eased inflation concerns.
Asian stocks declined, with the regional benchmark index erasing gains for the year, as yesterday’s reports of rising jobless claims and declining consumer confidence in the U.S. stoked concern the recovery in world’s biggest economy is weakening. Asia’s trading session ended before today’s U.S. jobs data. The MSCI Asia Pacific Index declined 0.9 percent and is down 0.1 percent in 2011.
Silver futures fell, capping the steepest weekly decline since at least 1975, as an increase in margin requirements and this week’s slump in commodities prompted investors to sell precious metals. Silver for July delivery fell 2.6 percent to $35.287 an ounce and sank 27 percent this week.
Gold Rebounds
Gold rebounded, trimming its biggest weekly drop in a year. Gold for June delivery rose 0.7 percent to $1,491.60 an ounce and lost 4.2 percent in the week.
Crude oil for June delivery fell $9.44, or 8.6 percent, to $99.80 a barrel yesterday, and extended those losses today, declining 2.6 percent to $97.18, the lowest close since March 15. The killing of Osama bin Laden by U.S. forces in Pakistan may have been the catalyst for this week’s rout in oil prices that’s deflating commodity prices around the world.
The yield on the 30-year Treasury bond climbed four basis points to 4.30 percent. Two-year note yields fell two basis points to 0.56 percent.
The Dollar Index, a gauge of the currency against six major peers, rose 0.8 percent to 74.760 after yesterday surging 1.6 percent, the most since October.
The euro weakened versus all 16 major counterparts, losing more than 2 percent versus the Mexican peso, New Zealand dollar and Australian dollar. Greek two-year bond yields rose six basis points, or 0.06 percentage point, to 25.339.
Greece Talks
A German official said the discussions among European finance officials would include a German paper on options for confronting Greece’s growing debt load, which has spurred speculation by investors that a restructuring was likely.
Earlier, Der Spiegel magazine reported that ministers are convening an emergency meeting after Greece threatened to withdraw from the euro region. Greece rejected the report, according to a finance ministry statement. German Chancellor Angela Merkel’s chief spokesman “categorically” denied that any discussions on a Greek exit were under way. He declined to comment when asked whether officials were meeting tonight.
A benchmark of U.S. corporate credit risk dropped for the first time this week. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 0.3 basis point to a mid-price of 90.2 basis points, according to index administrator Markit Group Ltd.
Sales of corporate bonds worldwide climbed 57 percent to $66.7 billion this week after totaling $43.8 billion in the period ended April 29, the lowest weekly total this year, according to data compiled by Bloomberg.
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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