U.S. stocks rose, rebounding from the first monthly loss since October, and metals led commodities higher as reports bolstered optimism in manufacturing from Japan to the U.S. The yen weakened while Treasuries erased early losses to trade little changed.
The Standard & Poor’s 500 Index (SPX) climbed 0.5 percent to 1,614.96 at 4 p.m. in New York, paring an earlier rally of 1.3 percent. The Stoxx Europe 600 Index and Japan’s Topix Index (TPX) rose more than 1 percent each. The yen slipped 0.5 percent to 99.60 per dollar. The yield on the 10-year Treasury note decreased two basis points to 2.47 percent after rising as much as 6 basis points earlier. Copper, gold and aluminum jumped more than 2 percent to lead commodity gains.
The Institute for Supply Management’s factory index climbed to a three-month high of 50.9, beating the median economist forecast, while the Bank of Japan’s Tankan report signaled manufacturers’ confidence increased for the first time since 2011 and another report showed euro-area manufacturing output shrank less than initially estimated.
There is “a sense of optimism toward the second half,” Michael Weiner, chief investment officer at Unified Trust Co., in Lexington, Kentucky, said in a phone interview. The wealth-management firm oversees more than $3 billion in assets. “The market is beginning to think about second-quarter earnings and I think it wants to turn its attention away from the Fed-oriented things.”
More than $2.6 trillion was erased from the value of global equities last month as speculation mounted that the Federal Reserve will curb stimulus measures this year. U.S. government securities handed investors a loss of 2.5 percent in the first six months of 2013, according to Bank of America Merrill Lynch data, the biggest decline since the first half of 2009.
The S&P 500 rebounded after losing 1.5 percent in June, its first monthly decline since October. The S&P 500 still rallied 13 percent in the first half of the year, the best performance since a 17 percent gain in the first six months of 1998.
Trading volume in S&P 500 companies was 16 percent below the 30-day average. The benchmark index for U.S. stocks pared earlier gains after briefly climbing above its average for the past 50 days, a technical level watched by traders.
Industrial, consumer-staple and commodity shares led gains among the 10 main industry groups in the S&P 500 today, while utility and telephone companies posted the only declines.
Onyx Pharmaceuticals Inc. surged 51 percent after saying it is in contact with other possible bidders following its rejection of an unsolicited offer from Amgen Inc. Apple Inc. added 3.2 percent after Raymond James & Associates Inc. lifted the stock to strong buy from outperform. Pandora Media Inc. rallied 3 percent as Morgan Stanley upgraded the stock.
U.S. payrolls data due this week will be key for investors seeking to gauge the timing of any Fed tapering, according to AMP Capital’s Graham. Payrolls probably grew by 165,000 workers in June, after gaining 175,000 in May, according to the median forecast of 70 economists surveyed by Bloomberg before the data’s release July 5.
BMO Capital Markets raised its 2013 estimate for the S&P 500 to 1,650 from 1,575. Strategists led by Brian Belski said in a note to clients they had overestimated the market’s reaction to the potential reduction in Fed stimulus while “earnings growth projections are slowly improving, and macro data has been relatively upbeat lately.”
Alcoa Inc. will mark the unofficial start to the second-quarter earnings season on July 8 as the first Dow Jones Industrial Average company to report results. Per-share profit is forecast to have increased 2.4 percent during the period, according to a Bloomberg survey of analysts on June 28, led by a 20 percent increase at financial firms. Earnings excluding financial companies are projected to have decreased 0.9 percent in the period.
While American equity volatility had its biggest increase in two years last quarter, bearish options remain cheap when compared with bullish ones.
The Chicago Board Options Exchange Volatility Index (VIX) climbed 33 percent from April to June, the most since the third quarter of 2011, when it surged 160 percent. At the same time, options protecting against a 10 percent slide in the S&P 500 this year cost an average 8.28 points more than calls betting on a 10 percent rally, the least since 2006, according to three-month data compiled by Bloomberg.
The Stoxx 600 rose today after its first quarterly loss in a year. Siemens AG climbed 2.6 percent after Nokia Oyj (NOK1V) agreed to buy the German company’s 50 percent stake in their six-year-old joint venture, Nokia Siemens Networks. Shares in the Finnish mobile-phone maker jumped 3.7 percent.
The MSCI Emerging Markets Index was little changed following a four-day rally of 6.5 percent, the biggest since December 2011. The Shanghai Composite Index advanced 0.8 percent and money-market rates declined, with the seven-day repo rate sliding 71 basis points to 5.45 percent and earlier touching 5.40 percent, the lowest since June 17.
China’s Purchasing Managers’ Index fell to 50.1 from 50.8 in May, according to statistics released in Beijing, as a cash squeeze reduced credit and President Xi Jinping said officials shouldn’t be judged solely on their record in boosting the economy.
The yield on Egypt’s benchmark dollar bond due in April 2020 jumped to a record above 10 percent after protesters demanded President Mohamed Mursi step down.
The S&P GSCI (SPGSCI) gauge of 24 commodities gained 0.8 percent as copper jumped 3.4 percent and aluminum rallied 3.1 percent for the biggest advances. Gold for August delivery increased 2.6 percent to $1,255.70 an ounce, the biggest gain since April, as demand for coins, bars and jewelry rebounded following a record quarterly plunge.
Wheat futures slid 0.4 percent to a one-year low of $6.55 a bushel, extending the longest slump since 2005, on signs of record global output and reduced demand for supplies from the U.S., the world’s biggest exporter. Corn fell 1.9 percent to the lowest price since 2010 after the U.S. raised its plantings estimate to the highest since 1936.
Oil advanced 1.5 percent to $97.99 a barrel, rising for the fifth time in six days.
The difference between the world’s two most-traded crude oil grades shrank to less than $5 a barrel for the first time in about 2 1/2 years, underlining the easing of a supply bottleneck in the U.S. North Sea Brent crude was $4.99 a barrel more than West Texas Intermediate today, the first time the spread between the two grades has been at $5 or less since January 2011 on an intraday basis, according to data compiled by Bloomberg.
WTI, the main U.S. crude grade, had been typically the more expensive grade until mid-2010. The drop in the gap between Brent, a gauge for more than half the world’s oil, and WTI shows how improved pipeline networks and the use of rail links have helped to unlock a glut at America’s oil-storage hub at Cushing, Oklahoma.
The yen depreciated against 15 of its 16 major counterparts, sliding 0.9 percent versus the euro. The yen has dropped 9 percent this year, the worst performance in a basket of 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar climbed the most with a 6.2 percent advance and the euro rose 5 percent.
South Korea’s won jumped 0.7 percent against the dollar after data showed the nation registered a $5.5 billion trade surplus in June versus May’s $5.9 billion, the most since October 2010. The surplus averaged $2.9 billion in the past three years.
The JPMorgan Global FX Volatility Index lost 0.9 percent to 10.91 percent after touching 11.96 percent on June 24, the highest since June 2012. The average for 2013 is 9.21 percent.
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