Treasuries fell amid improving economic data, while the Standard & Poor’s 500 Index closed little changed at a five-year high as Apple Inc. (AAPL) led a slump in technology shares after profit growth slowed. The yen weakened for the first time in four days against the dollar.
Ten-year Treasury yields rose three basis points to 1.85 percent at 4 p.m. in New York. The S&P 500 closed less than 0.1 percent higher at 1,494.82 after earlier topping 1,500 (SPX) for the first time since 2007. The index rose for a seventh day, its longest streak since 2006. Apple sank 12 percent after reporting the slowest profit growth since 2003. Japan’s currency lost almost 2 percent to 90.37 per dollar, returning to its weakest level since 2010. Oil helped lead commodities higher.
Treasuries fell as U.S. jobless claims unexpectedly dropped last week to a five-year low, while the Conference Board’s index of leading indicators rose in December by the most in three months in a sign the world’s largest economy is poised to keep growing. U.S. securities remained lower even after a $15 billion auction of inflation-indexed 10-year debt drew a negative 0.63 percent yield.
“There’s high demand for some protection -- it tells you people are willing to pay a lot for that protection,” said William Larkin, a fixed-income money manager who helps oversee $500 million at Cabot Money Management Inc. in Salem, Massachusetts. “If you are a foreign central bank and you’ve got lots of U.S. dollars to invest, TIPS make more sense. At least you have some protection against inflation.”
The last six sales of 10-year Treasury Inflation Protected Securities since January 2012 have drawn negative yield as investors sought a refuge from inflation amid the Federal Reserve’s efforts to prop up the economy. Indirect bidders, a group that includes foreign central banks, bought 53.3 percent of the amount sold today, compared with 48.3 percent in the prior auction and an average of 42.3 percent for the past 10 auctions.
Netflix Inc. (NFLX) and Xerox Corp. helped lead a rally in stocks that sent the S&P 500 up as much as 0.5 percent earlier after reporting better-than-estimated earnings, joining the three- quarters of S&P 500 companies to top projections so far in the reporting season.
Netflix, the world’s largest online-video service, rose 44 percent for its biggest gain ever after beating its forecast for fourth-quarter subscriber growth and posting an unexpected profit. Xerox, the provider of document and business services, climbed 2.2 percent as earnings beat analyst projections thanks to a shift away from the traditional printing business.
Apple, the world’s biggest company by market value, slid to a one-year low of $450.50 in its biggest decline since 2008. The valuation of the shares sank to 10.2 times reported earnings, the cheapest level in more than 12 years. Apple’s stock accounts for 14 percent of the Nasdaq-100 and 3.2 percent of the S&P 500.
Fiscal first-quarter profit rose less than 1 percent to $13.1 billion, or $13.81 a share. Sales climbed 18 percent to $54.5 billion, compared with 73 percent growth in the same period a year ago. Apple’s latest results underscored the rising costs of product overhauls amid competition from Samsung Electronics Co. in the saturating smartphone market.
The S&P 500 rose to a five-year high in regular trading yesterday after U.S. lawmakers voted to temporarily suspend the federal debt limit. The benchmark gauge of American stocks has climbed 5.1 percent this year. Earnings have beaten the average analyst estimate at about 75 percent of the 134 companies in the S&P 500 that released results so far in this reporting season, data compiled by Bloomberg show.
The S&P 500 needs to rise 4.7 percent, and the Dow Jones Industrial Average must climb 2.5 percent, to reclaim record highs set in 2007.
Stock futures pared losses before the open of exchanges in New York after the government jobless-claims data. Applications for unemployment insurance payments decreased by 5,000 to 330,000 in the week ended Jan. 19, the fewest since the same week in 2008, the Labor Department said. Economists forecast 355,000 claims, according to the median estimate in a Bloomberg survey.
Two shares advanced for each that fell in the Stoxx Europe 600 Index (SXXP), which added 0.2 percent to an almost two-year high. EasyJet Plc (EZJ) climbed 5.1 percent as Europe’s second-largest discount carrier said fiscal first-quarter sales gained 9.2 percent. Opap SA (OPAP) tumbled 11 percent in Athens as the European Union’s highest court said Greece’s gambling monopoly is unlawful. Logitech International SA (LOGN), the world’s biggest maker of computer mice, fell 9.6 percent in Zurich after posting a third-quarter loss of $195 million.
Silver for immediate deliver fell 1.8 percent, the first drop in nine days, and nickel slipped 0.9 percent. Oil climbed 0.8 percent to $95.95 a barrel and the spread between West Texas Intermediate crude and London-traded Brent narrowed amid speculation the Seaway pipeline will soon resume full shipments.
The yen weakened at least 0.9 percent against all 16 major peers as Japan’s deputy economy minister backed further declines. A yen at 100 to the dollar wouldn’t be a problem, Yasutoshi Nishimura said in an interview in Tokyo, even after the currency’s 11 percent drop in the past three months.
Nishimura’s “comments reinforce investor expectations that the Japanese government would like to see dollar-yen extend its recent correction,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a report today.
The MSCI Emerging Markets Index fell 0.4 percent as technology stocks led declines. South Korea’s Kospi index slid 0.8 percent after economic growth data missed estimates and North Korea threatened a nuclear test. Taiwan’s Taiex lost 0.6 percent and the Shanghai Composite Index dropped 0.8 percent.
The rupee was little changed at 53.6850 per dollar after falling to as low as 53.8913. India increased the limit on foreign investment in local-currency bonds by $10 billion to $75 billion, the central bank said.
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