Stocks surged, with the Standard & Poor’s 500 Index climbing to its highest closing level ever, and metals gained as the dollar slid after Federal Reserve Chairman Ben S. Bernanke called for maintaining monetary stimulus.
The S&P 500 rose 1.4 percent to 1,675.02 at 4 p.m. in New York and the MSCI Emerging Markets Index advanced 3.1 percent for its biggest gain in almost 10 months. Treasuries rose and gold futures rallied 2.6 percent for a fourth straight advance, the longest winning streak since April. Bloomberg’s Dollar Index, a gauge of the currency against 10 major peers, sank 1.4 percent. Portugal’s PSI 20 Index (PSI20) slid 2 percent and the nation’s bonds slid amid concern a political crisis will persist.
Bernanke said yesterday that “highly accommodative monetary policy for the foreseeable future is what’s needed” and minutes of the Fed’s June meeting showed officials want to see more signs of job growth before starting to scale back their $85 billion-a-month bond purchases. About $5.3 trillion was erased from global equities from May 22 to June 24 after Bernanke signaled that the central bank could start tapering asset purchases this year.
“Everyone realizes that Fed policy is going to remain extraordinarily accommodative,” Hank Smith, who oversees $7 billion as chief investment officer at Radnor, Pennsylvania-based Haverford Trust Co., said by telephone. “The market has adjusted to this and we’re back to where we were prior to the Fed’s announcement of what was really a very subtle shift in policy.”
The S&P 500 rose for a sixth straight day, its longest rally since March, with trading volumes 2.6 percent lower than the 30-day average. The benchmark index has recouped all of a 5.8 percent slide from May 22 to June 24 triggered after Bernanke told Congress the Fed could taper its bond purchases if the economy continues to improve. The Nasdaq-100 Index has climbed for 12 straight sessions, the longest rally in three years.
All 10 of the main industry groups in the S&P 500 advanced, with technology, utility and commodity companies leading gains. Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. rose at least 4.6 percent as gold rallied. Advanced Micro Devices Inc. rose 12 percent as analysts recommended that investors buy the shares.
Microsoft Corp. jumped 2.8 percent after saying it is reorganizing into fewer units and shuffling senior management roles to speed development of hardware and Web-based services.
Intel Corp. and Walt Disney Co. also climbed more than 2.5 percent to lead the Dow Jones Industrial Average up 169.26 points to 15,460.92 as the 30-stock gauge reclaimed a record high on a closing basis for the first time since May. The Russell 2000 Index of smaller U.S. companies jumped 1.3 percent to reach a record for a fifth straight day.
Benchmark 10-year Treasury yields declined 5.5 basis points to 2.57 percent, after climbing to 2.75 percent earlier this week, the highest since August 2011. German 10-year bond yields fell four basis points to 1.62 percent.
Stocks rallied even as the number of Americans filing for unemployment benefits unexpectedly increased to a two-month high of 360,000 last week, Labor Department figures showed. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 340,000. Claims are difficult to adjust in July for seasonal events such as vehicle plant shutdowns and the Independence Day holiday, a Labor Department spokesman said as the data were released.
Minutes of the Fed’s June meeting showed about half of the 19 participants in the Federal Open Market Committee wanted to halt the central bank’s bond-buying program by year end. The minutes also showed many wanted to see more signs that employment is improving before backing a reduction in the pace of asset purchases. Data last week showed U.S. employers added 195,000 jobs last month, beating the increase of 165,000 predicted by economists.
About three stocks climbed for every one that dropped in the Stoxx Europe 600 Index, which advanced 0.6 percent. A gauge of mining companies rallied 3.9 percent, its biggest gain since January. BHP Billiton Ltd. and Rio Tinto Group, the world’s two largest commodity producers, rose more than 4.5 percent each.
Associated British Foods Plc jumped 5.1 percent after reporting that sales grew 20 percent at its Primark clothing business in the 16 weeks to June 22.
Portugal’s Banco Comercial Portugues SA and Banco BPI SA lost more than 6 percent in Lisbon. Portugal’s President Anibal Cavaco Silva used a televised speech last night to call for the end of the country’s bailout program in June 2014 to coincide with the start of the process leading to new elections. Yields on the nation’s 10-year bonds rose 13 basis points to 6.90 percent.
The MSCI Emerging Markets Index added 3 percent, the most since Sept. 14 on a closing basis. China’s stocks advanced the most since Dec. 14 as lenders rallied on speculation the government will take measures to bolster economic growth. Ping An Bank Co. (000001) and China Minsheng Banking Corp. (600016) jumped more than 9 percent, helping the Shanghai Composite Index (SHCOMP) rise 3.2 percent.
The cost of insuring against losses on corporate bonds dropped, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies falling 3.7 basis points to 105.66.
The dollar weakened against 15 of its 16 major peers as the Bloomberg Dollar Index sank to its lowest level in two weeks. The euro gained for a second day, climbing 0.9 percent to $1.3093. South Korea’s won climbed 0.8 percent versus the dollar after the Bank of Korea held its benchmark seven-day repurchase rate unchanged at 2.5 percent for a second straight month today.
The yen strengthened 0.8 percent to 98.89 per dollar after the Bank of Japan said at the end of its two-day meeting today it would retain its plan for monetary stimulus.
The Indian rupee was little changed at 59.68 per dollar. The central bank may impose further curbs on rupee trading by lowering lenders’ net open position limits, according to a person with knowledge of the matter, who asked not to be identified because the information is confidential. They were referring to the amount of foreign-exchange contracts that investors can hold without opposing trade covers.
Silver for September delivery jumped 4.1 percent to settle at $19.956 an ounce and gold and copper gained at least 2.5 percent. West Texas Intermediate oil fell 1.5 percent to $104.91 a barrel after rising to a 15-month high of $107.45 a barrel earlier. The S&P GSCI (SPGSCI) gauge of 24 commodities lost 0.4 percent after seven straight gains.
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