Stocks Gain After Retail Sales; Commodities Decline

U.S. stocks rose, sending the Standard & Poor’s 500 Index to its biggest gain in two weeks, and the yen weakened after American retail sales topped estimates. Commodities fell as manufacturing in the New York region shrank for a third month.

The S&P 500 climbed 0.8 percent to 1,440.13 as of 4 p.m. in New York. The Stoxx Europe 600 Index climbed 0.5 percent. The S&P GSCI gauge of raw materials lost 0.3 percent, led by natural gas and silver. Oil pared losses after falling as much as 2.3 percent in New York. The yen slid 0.3 percent to 78.68 per dollar. Ten-year Treasury yields rose one basis point to 1.66 percent after a four-day drop.

U.S. retail sales climbed 1.1 in September following a revised 1.2 percent increase in August that was the biggest since October 2010 and larger than previously reported. The median forecast of 77 economists surveyed by Bloomberg called for a 0.8 percent rise. The Federal Reserve Bank of New York’s general economic index rose to minus 6.2 from minus 10.4 in September, which was the lowest since April 2009.

“We’ve had a decent series of improving economic numbers,” Michael Vogelzang, who oversees $2.3 billion as president and chief investment officer at Boston Advisors LLC, said in a phone interview. “Overall, the global economy is quite tepid. The retail sales are really about the U.S. consumer and that seems to be a continuing bright spot in the market.”

The Bloomberg Economic Surprise Index, which compares 38 indicators with analysts’ predictions, jumped to 0.02 today from minus 0.06 on Oct. 12. The index, based on gauges compiled by private businesses and trade groups in addition to government, turned positive for the first time since May.

Citigroup Earnings

Citigroup Inc. (C) rose 5.5 percent for the biggest advance since March after earnings exceeded estimates. Results benefited from a $582 million tax benefit and a surge in bond-trading revenue. Sprint Nextel Corp. (S) slid 0.7 percent after Softbank Corp. (9984) agreed to buy a 70 percent stake in the third-largest U.S. wireless carrier.

Some 84 companies in the S&P 500 are releasing results this week, according to data compiled by Bloomberg. Of the 38 companies in the benchmark index that have reported since Oct. 9, 27 posted earnings that exceeded analyst estimates, according to data compiled by Bloomberg.

“The direction of the economic data is positive, but we’re moving at a very slow pace and the market is very fragile to external shock,” Dan Veru, who oversees $3.5 billion as chief investment officer at Palisade Capital Management LLC in Fort Lee, New Jersey, said in a phone interview. “The big question regarding earnings is whether expectations have come down enough so that companies can beat guidance.”

Gold Declines

Oil for November delivery declined 0.2 percent to $91.68 a barrel in New York. Prices touched $89.79, the lowest level since Oct. 9. Gold futures for December delivery tumbled 1.3 percent to $1,737.60 an ounce, the biggest drop for a most- active contract since July 6.

Bank of Israel Governor Stanley Fischer said the world is “awfully close” to a recession. While there has been “a lot of progress made” to improve the global economy, the effects haven’t materialized, Fischer said in an interview in Tokyo with Bloomberg Television airing today.

The yield on the Greek 10-year bond fell to 17.58 percent, the least since the nation restructured its debt in March, after German Finance Minister Wolfgang Schaeuble ruled out a sovereign default. The cash-strapped country and international inspectors are seeking agreement on deficit-reduction measures before an Oct. 18 European Union leaders’ summit.

Chinese Inflation

The euro was little changed at $1.2955, while the Spanish 10-year bond yield rose 19 basis points to 5.81 percent.

China’s inflation was close to the slowest pace in two years in September, giving the government room to ease policies should the economy deteriorate. Consumer prices rose 1.9 percent from a year earlier while the producer-price index dropped 3.6 percent, the National Bureau of Statistics said.

The MSCI Emerging Markets Index (MXEF) was little changed. The Shanghai Composite Index slid 0.3 percent. South Africa’s rand weakened 0.9 percent, its second straight decline, after S&P cut the country’s sovereign rating one level on Oct. 12.

To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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