S&P 500 Rallies Most This Year on Earnings as Euro Gains

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U.S. stocks rallied the most this year amid better-than-estimated earnings and jobless claims, while the euro rose and German bonds fell as the European Central Bank left interest rates unchanged and refrained from adding stimulus. Gasoline, nickel and zinc led commodity gains.

The Standard & Poor’s 500 Index rose 1.2 percent at 4 p.m. in New York and the Stoxx Europe 600 Index jumped 1.5 percent, the best gains of the year for both, and a gauge of stocks in emerging markets climbed the most since November. The euro strengthened 0.4 percent to $1.3592 and the yield on 10-year German bunds rose six basis points. Most currencies of developing nations rose against the dollar, with Chile’s peso, Hungary’s forint and Turkey’s lira rising at least 1.2 percent. The S&P GSCI gauge of 24 commodities rose for a third day.

U.S. jobless claims fell for the first time in three weeks, Labor Department figures showed, and Walt Disney Co. helped lead stocks higher after earnings beat estimates. ECB President Mario Draghi said the central bank could take action to counter low inflation as soon as next month, when more economic data is available. About $3 trillion has been erased from the equities worldwide this year amid a selloff in emerging-market currencies as the Federal Reserve cut stimulus.

Related: Draghi Signals ECB Ready to Wait Until March for Action

“Investors have really turned their focus back on the larger macro data,” Greg Woodard, a portfolio strategist in Fairport, New York, at Manning & Napier Inc., which has about $50 billion under management, said in a phone interview. “Earnings seem to be coming in decent. Looking at economic data, you have patches of weakness and you have patches of strength. We think the broad picture suggests that we should continue to have expansion in the U.S. It’s going to be somewhat sluggish.”

Earnings Season

The S&P 500 fell 0.2 percent yesterday to extend a drop from its record high on Jan. 15 to more than 5 percent.

Among stocks moving today, Walt Disney rose 5.3 percent to lead the Dow Jones Industrial Average up 187 points after the world’s largest entertainment company posted first-quarter profit that beat projections on strong results from its movies “Frozen” and “Marvel’s Thor: The Dark World.” Coca-Cola Co. advanced 1.1 percent after the largest beverage company agreed to buy a 10 percent stake in Green Mountain Coffee Roasters Inc. for about $1.25 billion. Green Mountain jumped 26 percent, the most since May.

Akamai Technologies Inc., which helps speed Internet-data delivery for customers such as Apple Inc. and Sony Corp., soared 21 percent to a seven-year high after beating analysts’ estimates for fourth-quarter profit. Twitter Inc. slumped 24 percent, the most since it went public last year, after the microblogging service said user growth slowed.

News Corp., Expedia Inc. and Philip Morris International Inc. are among companies reporting earnings today. About 77 percent of the S&P 500 companies that have posted results this earnings season beat analysts’ estimates, data compiled by Bloomberg show.

European Markets

The Stoxx 600 rebounded after it lost 5.4 percent from its six-year high on Jan. 22 through yesterday.

Daimler AG gained 2.6 percent after the third-largest maker of luxury vehicles posted a 45 percent surge in quarterly profit. Volvo AB, the second-biggest truckmaker, climbed 4.6 percent after saying it will cut 4,400 jobs. A gauge of car companies in the Stoxx 600 climbed 2.2 percent to help lead gains among 19 industries.

Alcatel, AstraZeneca

Alcatel-Lucent SA jumped 9.2 percent after the French network-equipment vendor posted its first quarterly profit in two years. AstraZeneca Plc lost 1.6 percent after the U.K.’s second-largest drugmaker said fourth-quarter profit fell amid increasing generic competition.

The MSCI Emerging Markets Index climbed 1.4 percent, snapping a three-day slide that sent the gauge to the lowest close since August. The Hang Seng China Enterprises Index of mainland Chinese companies listed in Hong Kong advanced 0.7 percent, rebounding from a six-month low. Benchmark indexes in the Czech Republic, Poland and Brazil surged more than 2 percent.

The lira strengthened 1.3 percent versus the dollar, helping underpin a 3.4 percent advance in the benchmark stock index. Banks offered the highest rate on savings after a doubling of central bank rates last month.

The three-month deposit rate offered by Turkish banks was at 11.10 percent today, equal to the highest since June 2012 and the most among developing nations after Argentina, according to data compiled by Bloomberg. The central bank raised the benchmark one-week repurchase rate to 10 percent from 4.5 percent after an extraordinary interest-rate meeting on Jan. 28.

Natural Gas

Nickel, gasoline, zinc and copper jumped at least 1.3 percent to lead gains in 17 of 24 commodities tracked by the S&P GSCI. (SPGSCI)

U.S. natural gas fell 2 percent after losing 6.4 percent yesterday. The fuel reversed an earlier gain of 7.3 percent after a government report showed a smaller-than-forecast decline in inventories. West Texas Intermediate oil rose 0.5 percent to $97.84 a barrel.

Cotton rallied 0.9 percent, the third consecutive gain. Production in Australia, the world’s third-biggest exporter of the fiber, may decline to at least a three-year low on drought, according to Cotton Australia, a Sydney-based growers group.

The yield on German 10-year bunds rose six basis points to 1.70 percent, after dropping to 1.60 percent yesterday, the least since Aug. 1. The rate on U.S. 10-year Treasuries (USGG10YR) was up three basis points at 2.70 percent, while the rate on similar-maturity U.K. gilts increased six basis points to 2.75 percent.

To contact the reporters on this story: Nick Taborek in New York at ntaborek@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net

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