U.S. stocks ended the session higher as Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and that a majority of the region’s leaders support issuing a joint bond to fight the debt crisis. The euro fell to an almost two-year low, while commodities advanced.
The Standard & Poor’s 500 Index added 0.1 percent to 1,320.68 at 4 p.m. in New York after slipping as much as 0.6 percent. The euro lost 0.4 percent to $1.2534 after touching $1.2516, the weakest since July 2010. The S&P GSCI Index of 24 raw materials climbed 0.4 percent, rebounding from the lowest level since October, as oil rose from a seven-month low. Ten- year Treasury yields added four basis points to 1.78 percent.
Stocks fluctuated in the morning before turning lower at noon as three officials with knowledge of the matter told Bloomberg News that China’s biggest banks may fall short of loan targets as an economic slowdown reduces demand for credit. Shares recovered in the final hour as Monti told Italian television station La7 that Italy can help push Germany to support the idea of common euro-area debt and that Germany has an interest to insure no country leaves the currency.
“Everything we’re talking about now is to put more order in that disorder,” said Dan Veru, who oversees $3.7 billion as chief investment officer of Palisade Capital Management LLC in Fort Lee, New Jersey. “The market has come down not necessarily because growth has slowed so significantly, but because of a potential disorderly unwind of the euro. I share the view that Greece won’t come out of the euro. There’s no mechanism in place to do that.”
About $4 trillion has been erased from global equities this month as concern deepened Greece will abandon the euro.
The S&P 500 has risen for four sessions following an 8.7 percent slide from its four-year high on April 2 through May 18. The slump dragged the index’s price-to-earnings ratio as low as 13.1, the cheapest valuation using reported earnings since November, according to data compiled by Bloomberg.
Data from the U.S. Commerce Department showed bookings for non-military goods excluding aircraft decreased 1.9 percent after falling 2.2 percent in March, the first back-to-back decline in a year. Demand for all durable goods, those meant to last at least three years, rose 0.2 percent, matching the median forecast of economists surveyed by Bloomberg News.
Applications for jobless benefits decreased by 2,000 to 370,000 in the week ended May 19 from a revised 372,000 the prior week, Labor Department figures showed today. A manufacturing index from London-based Markit Economics, released for the first time today, showed that manufacturing in the U.S. expanded in May at the slowest pace in three months.
U.S. notes retreated even after the Treasury sold debt at a record-low auction yield for a second consecutive day as Europe’s debt crisis underscored the status of U.S. government debt as the preferred refuge.
Benchmark 10-year yields rose as Federal Reserve Bank of New York President William Dudley said he doesn’t currently see the need for additional stimulus. The $29 billion seven-year note sale drew a yield of 1.203 percent, compared with the previous record of 1.347 percent at the April 26 auction and a forecast of 1.203 percent in a Bloomberg News survey of eight of the Fed’s primary dealers. Yesterday’s five-year note sale also drew an all-time low yield.
More than three shares gained for every one that declined in the Stoxx Europe 600 Index (SXXP), which rebounded 1 percent after tumbling 2.1 percent yesterday. KBC Groep NV, Belgium’s biggest bank and insurer, and ING Groep NV, the largest Dutch financial- services company, each gained more than 2 percent. EON AG and RWE AG rose after Commerzbank AG upgraded its recommendations on Germany’s biggest utilities. Cable & Wireless Communications Plc surged 18 percent after reporting earnings that beat estimates.
The Swiss franc weakened to its lowest level in two months against the euro amid speculation the central bank may take action to discourage investment in the nation through taxing deposits. SNB spokeswoman Silvia Oppliger declined to comment on the Swiss franc exchange rate. Finance Ministry spokesman Roland Meier wouldn’t comment on the tax speculation.
The euro weakened against 13 of 16 major peers, with the South African rand and New Zealand’s dollar climbing more than 0.7 percent.
“We are way oversold in the euro,” Taylor said in an interview on Bloomberg Television’s “Inside Track” with Erik Schatzker and Sara Eisen. “The euro will come up until the first of June or maybe the fourth. Then the reality of the Greek election will set in and we’ll start going down again. I don’t expect to see the euro get hammered in the next five or six days.”
French, Austrian Bonds
French and Austrian bonds rose, sending their five-year yields to record lows, as investors favored higher-yielding alternatives to German securities amid the deepening euro-area sovereign debt crisis. The French five-year yield decreased 16 basis points, or 0.16 percentage point, to 1.37 percent and went as low as 1.355. Austria’s five-year yield slipped 12 basis points to a record 1.27 percent, while its two-year note yields dropped nine basis points to 0.41 percent.
Rates on 10-year Italian and Spanish bonds retreated at least four basis points.
Oil rebounded from a seven-month low, climbing 0.8 percent to $90.66 a barrel, as world powers and Iran worked to overcome “obstacles” at their second round of meetings on the country’s nuclear program. Cotton, silver and nickel rallied more than 2 percent to lead gains among 20 of 24 commodities tracked by the S&P GSCI.
The MSCI Emerging Markets Index (MXEF) increased 0.7 percent, rebounding from a five-month low, on higher oil and China’s pledge to look at policies favoring growth boosted energy and metals shares. India’s Sensex Index jumped 1.7 percent, while Brazil’s Bovespa tumbled 1 percent.
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