Global stocks extended the best first-quarter rally since 1998 and the euro gained as European finance ministers agreed to increase rescue funds and U.S. personal spending and consumer confidence topped forecasts. Oil rebounded from its biggest drop of the year and Treasuries slid.
The MSCI All-Country World Index (MXWD) increased 0.6 percent at 4 p.m. in New York, extending its three-month gain to 11 percent. The Standard & Poor’s 500 Index climbed 0.4 percent and is up 12 percent this year, also the best first-quarter advance in 14 years. The euro rose 0.3 percent versus the dollar and the cost of insuring European sovereign debt against default snapped a two-day gain. Agricultural crops led commodities higher as a U.S. government report signaled tighter supplies. Ten-year Treasury yields surged five basis points to 2.21 percent.
European governments capped fresh rescue lending at 500 billion euros ($666 billion), bringing the size of the firewall to 800 billion euros, according to a statement after a meeting in Copenhagen today. U.S. consumer purchases rose the most in seven months, according to Commerce Department data, while the Thomson Reuters/University of Michigan final index of consumer sentiment reached the highest level in more than a year.
“Things are not going gangbusters, but they are more positive,” Ann Miletti, senior portfolio manager for Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. Her firm manages $213 billion. “The tail risk of Europe seems to have gone away. In an environment where you have stocks trading at discounts to their historical levels, it does create a sweet spot.”
Gains in the S&P 500 (SPXL1) this year have been led by financial and technology companies, with gauges of both groups increasing about 21 percent in the first quarter. Even after rallying 28 percent from last year’s low in October and reaching an almost four-year high on March 26, the S&P 500 is trading at about 14.6 times (SPX) reported earnings, below the average multiple of 16.4 since 1954. The Nasdaq Composite Index rallied almost 19 percent this quarter, the most to start a year since 1991.
Walt Disney Co. (DIS), the largest U.S. entertainment company by market value, advanced 1.8 percent for the biggest gain in the Dow Jones Industrial Average after Lazard Ltd. recommended buying the shares. Pfizer Inc. and Hewlett-Packard Co. (HPQ) also rose more than 1 percent to pace gains in the Dow, which rose 66.22 points to 13,212.04 to complete an 8.1 percent first-quarter rally. Dow Chemical Co. and Monsanto Co. advanced with commodities.
Apple Inc. retreated 1.7 percent today and pared its first- quarter rally to 48 percent after an audit of Foxconn Technology Group, its biggest manufacturer, found “serious and pressing” violations of Chinese labor laws.
Stocks started the session higher after Commerce Department data today showed consumer purchases climbed 0.8 percent in February, the largest gain since July. The median estimate of economists surveyed by Bloomberg News called for a 0.6 percent increase. Incomes advanced less than projected, the data showed. The Michigan confidence index rose to 76.2, topping the median economist forecast of 74.5.
Thirty-year Treasury bonds also declined, sending yields up seven basis points to 3.34 percent. Two-year yields were little changed at 0.34 percent.
Treasuries had the steepest quarterly drop since the last three months of 2010, while corporate bonds surged as the world’s largest economy showed signs of improvement. U.S. government securities lost 1 percent since Dec. 31 as of yesterday, according to Bank of America Merrill Lynch indexes. An index of investment-grade and high-yield corporate bonds returned 3.2 percent, the most since July to September 2010
The Stoxx Europe 600 Index (SXXP) rallied 1 percent, snapping three days of losses, as automakers and construction companies rallied. The regional benchmark index extended its first-quarter advance to 7.7 percent. HeidelbergCement AG (HEI) climbed 4.3 percent as HSBC Holdings Plc recommended the cement maker.
The euro strengthened almost 3 percent against the dollar in the first quarter, its biggest quarterly gain in a year, and jumped 11 percent versus the yen in the period for its biggest quarterly gain in 11 years. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, fell 0.3 percent today, leaving it 1.5 percent lower since the end of 2011.
Italian 10-year bonds rose today, driving the yield down nine basis points to 5.12 percent, with similar-maturity Spanish yields falling 11 basis points and Belgian yields dropping six basis points.
Portuguese bonds returned 14 percent this quarter, the best-performing market according to Bloomberg/EFFAS indexes. Irish government bonds returned 11 percent in the first quarter, the second-biggest gain, after Portugal, as measured by indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian debt was third with a 10.5 percent return, and Belgian securities earned 4.7 percent for fourth place, according to the gauge.
The Markit iTraxx SovX Western Europe Index of credit- default swaps tied to the debt of 15 governments dropped 3.8 basis points to 268.5.
Crude climbed 24 cents to $103.02 a barrel, rebounding from yesterday’s 2.5 percent drop and capping a second straight quarterly gain. Wheat, corn and soybeans surged at least 3.5 percent to lead gains in 15 of 24 commodities tracked by the S&P GSCI Index.
U.S. farmers will plant 73.902 million acres with soybeans this year, down 1.4 percent, the U.S. Department of Agriculture said in a report today. Analysts surveyed by Bloomberg forecast 75.429 million. In a separate report, the USDA said corn inventories on March 1 fell 7.9 percent from a year earlier and were the lowest for that time of year since 2004, while wheat supplies fell 16 percent.
The MSCI Emerging Markets Index (MXEF) gained 0.9 percent and is up 14 percent this year, its best first-quarter rally since 1992. The Hang Seng China Enterprises Index (HSCEI) of companies listed in Hong Kong gained 1 percent as Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. reported better-than-estimated earnings. India’s Sensex Index climbed 2 percent.
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