Stocks rallied, sending the Standard & Poor’s 500 Index to an almost two-month high, and commodities rose as data on jobs and retail sales bolstered optimism in the economy. The euro fell as the region’s debt crisis overshadowed a European Central Bank interest-rate increase.
The S&P 500 gained 0.8 percent to 1,349.91 at 9:37 a.m. in New York, above its highest close since May 10. The S&P GSCI index of 24 commodities rose 1.7 percent as oil climbed above $98 a barrel. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments advanced 2.4 basis points to 251.75. The euro slid versus all but two of 16 major peers.
Companies in the U.S. added 157,000 workers to their payrolls in June, according to figures from ADP Employer Services, bolstering confidence in tomorrow’s Labor Department job report. European Central Bank President Jean-Claude Trichet raised Europe’s benchmark interest rates to 1.5 percent, the highest since March 2009.
“A lot of people were concerned we were in a recession,” said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, which manages more than $700 billion. “Now we have a sense that the ADP report looks like we’re going to see a better payroll report. All these things reflected that this was no more than a soft patch. This is not another recession.”
The S&P 500 has recovered almost all of its loss after slumping as much as 7.2 percent from the end of April through June 15 amid disappointing economic data.
Gains in the S&P 500 today were led by retailers and banks. Limited Brands Inc. and Gap Inc. (GPS) advanced at least 3.1 percent after last month’s sales surpassed analysts’ projections as discounts, warmer weather and lower gas prices in the U.S. enticed consumers to spend.
The median estimate of economists surveyed by Bloomberg called for an advance of 70,000 in the ADP report. Jobless claims fell by 14,000 to 418,000 in the week ended July 2, Labor Department figures showed. The median forecast of economists in a Bloomberg survey called for a drop to 420,000. Monthly payrolls data tomorrow will probably show an increase of 100,000 jobs, economists said.
Four stocks advanced for every one that fell in the Stoxx 600. Man Group Plc (EMG) climbed 3.7 percent to a one-month high as the world’s biggest hedge fund manager reported increased assets. ThyssenKrupp AG fell 5.8 percent as Germany’s largest steelmaker sold as much as 1.68 billion euros ($2.4 billion) of shares to help reduce debt.
The euro slipped 0.3 percent to $1.4274 and weakened against 14 of 16 major peers. The pound depreciated 0.2 percent to $1.5980 after the Bank of England kept its main rate at a record low 0.5 percent. After raising rates today, the ECB may increase borrowing costs further in the fourth quarter, according to a Bloomberg survey of economists
Credit-default swaps insuring Portugal’s debt jumped 88 basis points to a record 1,023, signaling a 59 percent chance of default within five years. Swaps on Ireland rose 59 basis points to an all-time high 902, while Greece surged 47 basis points to a record 2,197, according to CMA. The yield on the Spanish 10- year bond rose five basis points to 5.65 percent, climbing for the fourth consecutive day, and the two-year note yield advanced seven basis points. Spain sold 3 billion euros of three-year and five-year bonds, the central bank said.
The MSCI Emerging Markets Index gained 0.6 percent, advancing for the first time in three days. Russia’s Micex Index (INDEXCF) jumped 2 percent as oil rose and Bank of America Corp. (BAC) said it favored coal and gold producers. The Shanghai Composite Index fell 0.6 percent after the central bank raised interest rates for a third time this year. The Thai baht appreciated 0.4 percent against the dollar after incoming Prime Minister Yingluck Shinawatra said her government intended to let the currency strengthen.
Crude oil in New York rose 1.8 percent to $98.40 a barrel.
An index of world food prices climbed last month, staying close to the all-time high reading of 238 in February. The gauge of 55 food commodities rose to 234 points in June from 231 points in May, the United Nations’ Food and Agriculture Organization said. Rice climbed 2.6 percent, the fifth gain in a row.
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