Stocks in U.S. Advance on Jobless-Claims Report as Treasuries Erase Losses

U.S. stocks gained as reports on American jobs and housing beat projections, while Treasuries erased losses after an auction of seven-year notes. Oil rallied for a sixth straight day, and copper declined.

The Standard & Poor’s 500 Index (SPX) rose 0.4 percent to 1,363.46 at 4 p.m. New York time. The Dow Jones Industrial Average rallied 0.4 percent to 12,984.69, the highest level since May 2008. Yields on 10-year U.S. Treasuries dropped one basis point to 2 percent. Crude added 1.5 percent, copper fell 0.7 percent and gold rallied 0.8 percent.

Applications for U.S. jobless benefits held at a four-year low, while a Federal Housing Finance Agency index of housing prices rose 0.7 percent, beating the median economist projection that called for a 0.1 percent gain. The S&P 500 has stalled this week after climbing toward 1,363.61, last year’s peak and the highest level since June 2008.

“Sometimes when you’re knocking on the door of a meaningful psychological level in the market you have to knock hard a few times to gain admittance,” David Sowerby, a Bloomfield Hills, Michigan-based portfolio manager at Loomis Sayles & Co., which oversees more than $155 billion, said in a phone interview. “We know that it will be anything but a smooth path. Valuation is compelling. There’s been improvement in the economy. That provides potential for stocks to move higher.”

Sears, Homebuilders

Sears Holdings Corp. (SHLD) surged 19 percent after announcing plans to sell 11 store sites and separate some smaller-format businesses after posting its largest quarterly loss in at least nine years. KB Home and PulteGroup Inc. added at least 4.3 percent to pace gains in homebuilders. Vivus Inc. added 78 percent after its weight-loss pill Qnexa won the backing of a U.S. advisory panel. Hewlett-Packard Co. (HPQ) slumped 6.5 percent as the computer maker’s profit forecast missed estimates.

European equities declined. The Stoxx Europe 600 Index lost 0.2 percent as UniCredit SpA and Commerzbank slumped at least 6.2 percent after the European Commission said the region’s economy will shrink.

Treasuries rose after the U.S. sale of $29 billion in seven-year notes drew stronger-than-average demand amid concern Europe’s sovereign-debt crisis hasn’t been contained.

U.S. 10-year yields reached a one-week low as the European Commission said the region’s economy will shrink this year, dragged down by Italy and Spain. At the seven-year note sale, the bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 3.11, compared with an average of 2.81 for the previous 10 sales.

‘Good One’

“It looks like a good one,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. “Treasuries are what people want to own because they think it’s the safest thing out there. It’s fear of Europe falling apart.”

The euro advanced to the strongest level in more than 10 weeks against the dollar as a report showed German business confidence rose to the highest level in seven months amid progress taming the region’s debt crisis.

The yen rose against the dollar after the sale of seven- year Treasury notes. Higher-yielding currencies appreciated as a measure of volatility among Group of Seven currencies dropped to the lowest in more than three years.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Susanne Walker in New York at swalker33@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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