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S&P 500 Extends Longest Rally Since 2004; Euro Gains

U.S. stocks rose, sending the Standard & Poor’s 500 Index to its first eight-day rally since 2004, as companies from Microsoft Corp. to Procter & Gamble Co. posted better-than-estimated earnings. The euro strengthened to an 11-month high while the yen traded at the lowest since 2010.

The Standard & Poor’s 500 Index added 0.5 percent to 1,502.96 at 4 p.m. in New York, its first close above 1,500 since 2007, even as Apple Inc. slid 2.4 percent and relinquished its position as the world’s biggest company by market value. The euro climbed 0.6 percent to $1.3456 as the European Central Bank said banks will repay more of its loans than economists forecast. The yen slid 0.7 percent versus the dollar. Oil capped a seventh weekly gain, the longest rally in almost four years.

Stocks extended their 2013 advance as earnings beat estimates at 10 of 13 companies in the S&P 500 that reported results since the close of markets yesterday. Per-share profit has exceeded the average analyst estimate at about 76 percent of the 147 companies in the index that released results so far in the reporting season, data compiled by Bloomberg show.

“With earnings surprisingly good, the trends are also more importantly favorable for the outlook for 2013, coupled with an economic recovery,” Christopher McHugh, who helps manage $3.5 billion at Turner Investment Partners in Berwyn, Pennsylvania, said in a telephone interview. “All that is fueling the continuation of a rally, but particularly the strong earnings growth that’s coming.”

Photographer: Kiyoshi Ota/Bloomberg

Japanese yen banknotes of various denominations are arranged for a photograph. Close

Japanese yen banknotes of various denominations are arranged for a photograph.

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Photographer: Kiyoshi Ota/Bloomberg

Japanese yen banknotes of various denominations are arranged for a photograph.

Earnings Season

Earnings have grown 12 percent for the S&P 500 companies that have reported results so far amid a 4.9 percent increase in sales. Profits for the entire index are forecast to have increased 4 percent in the period, according to analyst estimates compiled by Bloomberg.

Consumer and energy shares led gains among the 10 main industry groups in the S&P 500 today. The benchmark gauge of U.S. equities extended a fourth straight weekly gain. It needs to rise about 4.1 percent to reclaim its 2007 record of 1,565.15, while the Dow Jones Industrial Average must advance less than 2 percent to surpass its peak.

Microsoft Corp. climbed 0.9 percent to the highest since November after the world’s largest software maker said revenue rose while profit declined as the company spent more money to market its Windows operating system and lure consumers flocking to tablets and smartphones. P&G jumped 4 percent after also raising its 2013 forecast amid growth in market share in key categories.

Market Movers

Starbucks Corp. (SBUX), the world’s largest coffee-shop operator, advanced 4.1 percent as profit rose 13 percent in the fiscal first quarter, meeting analysts’ estimates.

Apple’s 12-month reign as the No. 1 stock ended after the shares slumped 17 percent this year, worse than any other companies in the S&P 500. The decline reduced its market capitalization to $413 billion, below Exxon Mobil Corp.’s $418 billion. Apple extended yesterday’s 12 percent tumble, triggered after the company reported the slowest profit growth since 2003. Exxon Mobil added 0.4 percent to $91.73 today, its highest price since October.

The Stoxx Europe 600 Index (SXXP) added 0.3 percent and has increased 0.9 percent this week, halting two weeks of losses. SolarWorld AG, Germany’s biggest solar-panel maker, slid 30 percent today after saying it needs to make “serious adjustments” to its debt structure.

The euro rose against 15 of its 16 major peers, trading for more than 85 British pence for the first time since Feb. 29. It strengthened 1.3 percent to 122.37 yen, and reached 122.77 yen, the highest since April 2011.

‘Quite Comfortable’

Banks will hand back 137.2 billion euros ($184 billion) of loans in their first early repayment of the ECB’s so-called Longer-Term Refinancing Operations, the central bank said today. That’s more than 84 billion euros economists predicted in a Bloomberg survey.

“It shows that banks are quite comfortable in terms of off-loading excess liquidity,” said Padhraic Garvey, head of developed-market debt strategy at ING Bank NV in Amsterdam. “This goes along with the theme of a reduction in the flight to safety.”

Italy’s 10-year bond yield fell three basis points to 4.13 percent, the lowest since 2010. German two-year notes dropped, pushing the yield eight basis points higher to 0.26 percent. German business confidence rose for a third month in January, according to the Ifo institute’s business climate index.

Yen, Commodities

The Japanese currency declined as much as 1 percent to 91.19 per dollar, the weakest level since June 2010 and capping an 11th weekly loss, the longest losing streak in data compiled by Bloomberg going back to 1971. Consumer prices fell for the seventh time in eight months in December, backing Prime Minister Shinzo Abe’s case for aggressive monetary easing to defeat deflation.

Cotton, lead and silver lost more than 1.6 percent to lead declines in 15 of 24 commodities in the S&P GSCI Index, sending the gauge down 0.2 percent. Gold futures dropped to a two-week low, falling 0.8 percent to $1,656.60 an ounce, amid reduced demand for the precious metal as a haven investment.

Copper slumped the most in a week, dropping 0.7 percent to $3.652 a pound, as an unexpected decrease in new-home sales tempered the demand outlook for the metal. Home sales fell 7.3 percent to a 369,000 annual pace, below the 385,000 median forecast in a Bloomberg survey of economists and the 398,000 rate in November that was the highest in more than two years, government figures showed today. Copper also fell after Anglo American Plc said it produced more of the metal last quarter.

The MSCI Emerging Markets Index (MXEF) lost 0.4 percent after Samsung Electronics Co. said the won’s strength is hurting profits and Kia Motors Corp.’s profit missed estimates. South Korea’s Kospi slid 0.9 percent, the most in more than a week. The Shanghai Composite Index dropped 0.5 percent. Russia’s Micex added 0.7 percent to the highest level since April while India’s Sensex and Brazil’s Bovespa gained 0.9 percent.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net; Sarah Pringle in New York at springle1@bloomberg.net

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

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