U.S. stocks climbed toward another record and gold advanced while the dollar weakened as corporate earnings topped estimates and signs of slower economic growth fueled bets the Federal Reserve will maintain stimulus.
The Standard & Poor’s 500 Index rose 0.3 percent to 1,752.07 at 4 p.m. in New York, bringing it three points away from an all-time high. The Stoxx Europe 600 Index gained 0.4 percent, while Chinese stocks fell as the benchmark money-market rate jumped the most since June. Gold climbed 1.2 percent while oil reversed an earlier loss. Treasury 10-year note yields traded near a three-month low. The dollar touched a two-year low against the euro.
The U.S. trade deficit was little changed in August as imports and exports stalled, data showed today. U.S. factory output expanded in October at a slower pace than forecast, while another report showed euro-area services and manufacturing grew less than estimated. Chinese manufacturing strengthened this month more than anticipated. Microsoft Corp. and Amazon.com Inc. gained after the market close as they released quarterly earnings.
“Earnings will improve,” David James, director of research at Alpha, Ohio-based James Investment Research Inc., said in a phone interview. His firm oversees more than $4.5 billion. “We want to look at the quality of these earnings as far as looking at revenues and making sure there is actual growth and not just manufactured growth.”
About 47 companies in the S&P 500 were scheduled to post results today, the busiest day of the third-quarter reporting season. Of the 212 companies that have released earnings so far, 76 percent exceeded analysts’ predictions for profit, while 53 percent beat sales estimates, according to data compiled by Bloomberg.
Earnings for members of the gauge probably increased 2.5 percent in the third quarter as sales climbed 2.2 percent, according to analysts’ estimates compiled by Bloomberg.
Homebuilders rallied 3.3 percent as a group today as PulteGroup Inc.’s profit surged. Ford Motor Co. gained 1.4 percent after earnings beat projections. McKesson Corp. jumped 4.9 percent after boosting its annual forecast and agreeing to buy Germany’s Celesio AG for about 3.9 billion euros ($5.4 billion). Symantec Corp. (SYMC) sank 13 percent as the maker of security software forecast sales and profit that fell short of analysts’ estimates.
The Bloomberg U.S. Airlines Index climbed 2.7 percent, for the highest level since 2007. Southwest Airlines Co. added 3.7 percent after earnings and operating revenue met forecasts. United Continental Holdings Inc. increased 1.1 percent after the world’s largest airline promised unspecified “numerous actions” to boost revenue and efficiency as third-quarter profit trailed analysts’ estimates.
Microsoft added 5 percent as of 4:28 p.m. in New York as it reported first-quarter sales and profit the exceeded projections. Amazon.com rose 4.6 percent in extended trading after third-quarter revenue beat estimates as consumers flocked to the online retailer.
Better-than-expected earnings and monetary stimulus from the Fed have driven the S&P 500 (SPX) up 23 percent this year. The 16-day partial government shutdown weighed on fourth-quarter growth and will prompt Fed policy makers to wait until March before starting to scale back the $85 billion of monthly bond purchases, a Bloomberg survey showed last week.
The S&P 500 rallied to a record on Oct. 22 after payrolls in the U.S. climbed by less than forecast in September, adding to speculation the Fed will delay curtailing its monetary stimulus. Policy makers are scheduled to meet Oct. 29-30, when they will evaluate the strength of the recovery with a less complete set of figures than usual due to the suspension of reports and collection of data during the government closure.
The Commerce Department today reported the trade deficit in the U.S. was little changed. More Americans than forecast filed applications for unemployment benefits last week as California continued to work through a backlog. The Markit Economics preliminary index of U.S. manufacturing decreased to 51.1 in October from a final reading of 52.8 at the end of the previous month, the London-based group said today.
A preliminary gauge of Chinese manufacturing strengthened to 50.9, compared with a projected 50.4 reading, according to data from HSBC Holdings Plc and Markit Economics and a Bloomberg survey.
The Stoxx Europe 600 Index rose for the 10th time in 11 days. Daimler AG, the maker of Mercedes-Benz cars, and ABB Ltd., the world’s largest maker of power transformers, climbed more than 3.3 percent after profit beat projections. Celesio jumped 5.4 percent after McKesson agreed to buy the German drug wholesaler.
Credit Suisse Group AG (CSGN) lost 2.8 percent after the second-biggest Swiss bank posted profit that missed analysts’ estimates. Husqvarna AB tumbled 13 percent in Stockholm, its steepest drop ever, as the biggest maker of powered garden tools reported profit that trailed projections.
The MSCI Emerging Markets Index fell for a second day, losing 0.3 percent. The Shanghai Composite Index dropped 0.9 percent and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 1.3 percent. The seven-day repurchase rate, a gauge of funding availability in the banking system, surged 65 basis points to 4.67 percent. The won weakened from a two-year high versus the dollar.
The yield on 10-year Treasury notes added one basis point to 2.52 percent. It touched 2.47 percent yesterday, the lowest since July 22.
Italy’s 10-year yield climbed four basis points to 4.15 percent as a report showed consumer confidence fell for the first time in five months.
The euro gained 0.2 percent to $1.3803 after climbing to as high as $1.3825, the strongest level since November 2011. The 17-nation currency rose 0.1 percent versus the yen. The dollar dropped 0.1 percent to 97.26 yen.
Norway’s krone advanced against all of its 16 major peers, rising 0.3 percent to 8.1340 per euro after the central bank left its benchmark interest rate unchanged and said the currency had depreciated since its last meeting.
The shekel declined 0.1 percent to 3.5234 per dollar after Finance Minister Yair Lapid said the currency is “too strong” and that he’ll work with designated Bank of Israel Governor Karnit Flug to weaken it.
Gold futures rose to $1,350.30 an ounce, a three-week high, on speculation that the Fed will maintain the pace of monetary stimulus to boost economic growth. The precious metal dropped 20 percent this year through yesterday, heading for the first annual decline since 2000.
West Texas Intermediate crude rose 0.3 percent to $97.11 a barrel, climbing from a four-month low. Futures earlier fell as much as 0.9 percent a day after Energy Information Administration data showed that U.S. crude output increased to the highest level in 24 years. Stockpiles climbed 6.8 percent to 379.8 million barrels in the five weeks ended Oct. 18, according to the EIA.
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