S&P 500 Caps Best Four-Day Rally in 13 Months, Gold Gains

Feb. 11 (Bloomberg) -- Federal Reserve Chairman Janet Yellen pledges to maintain her predecessor’s policies by scaling back stimulus in "measured steps." Yellen testifies before the House Financial Services Committee in Washington. (This is an excerpt. Source: Bloomberg)

U.S. stocks rose a fourth day and Treasuries fell as comments from Federal Reserve Chairman Janet Yellen fueled bets the economy is strong enough to weather further stimulus cuts. Gold extended a rally to five days.

The Standard & Poor’s 500 Index climbed 1.1 percent at 4 p.m. in New York, capping the biggest four-day rally since January 2013. The Nasdaq Composite Index gained 1 percent to erase its loss for the year. The MSCI All-Country World Index advanced 1 percent. Treasury 10-year note yields rose five basis points to 2.72 percent. Greek 10-year bonds advanced as the nation auctioned bills at the lowest rate in more than four years. Gold rose 1.2 percent to settle at $1,289.80, clinching its longest winning streak since 2012.

Economic growth has picked up and Yellen has seen “broad improvement” in the labor market, the chairmansaid today in remarks to the House Financial Services Committee. She repeated the Fed’s outlook for further reductions in “measured steps” and that asset purchases are not on a “pre-set course.” The House of Representatives is expected to approve an extension of the debt limit.

Related: Yellen Says Recovery in Labor Market Far From Complete

“Tapering continues, but it continues to be the result of an economic situation that’s slowly improving,” Steven Rees, head of U.S. equities at JPMorgan Private Bank, which oversees $977 billion in assets, said in a phone interview. “The economy is still on track to have a good year.”

Photographer: Spencer Platt/Getty Images

Traders work on the floor of the New York Stock Exchange on Feb. 10, 2014. Close

Traders work on the floor of the New York Stock Exchange on Feb. 10, 2014.

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Photographer: Spencer Platt/Getty Images

Traders work on the floor of the New York Stock Exchange on Feb. 10, 2014.

The S&P 500 rose above its average level over the past 50 sessions for the first time in more than two weeks. The index has rallied 3.9 percent during the longest streak of gains this year, trimming its decline in 2014 to 1.6 percent.

U.S. Stocks

Among stocks moving, Sprint Corp. jumped 2.7 percent after posting fourth-quarter revenue that topped analysts’ estimates. CVS Caremark Corp. climbed 2.7 percent as pharmacy sales rose on new medicines and new customers. Cliffs Natural Resources Inc. and Mosaic Co. increased more than 2.4 percent as raw-materials providers gained.

Yellen, 67, delivered her first public remarks as Fed chairman as policy makers pursue plans to gradually scale back the unprecedented bond-purchase program she helped put in place.

“I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2 percent while ensuring that it does not run persistently above or below that level,” she said.

The S&P 500 rose 0.35 percent on Feb. 15, 2006, the day of previous Chairman Ben S. Bernanke’s first report to Congress.

Federal Open Market Committee officials have twice reduced the size of the monthly asset-purchase program, lowering bond buying to $65 billion in February from $85 billion last year.

Taper Talk

“Yellen is just sticking to the script and she’s going to give it to next FOMC meeting to taper,” John Canally, an economic strategist at LPL Financial Corp. said in a phone interview from Boston. His firm oversees about $438.4 billion. “We’re fairly certain that tapering is happening and she has made it clear that it’ll take a high hurdle for it to stop.”

Treasury 10-year notes fell for the first time in three days. The U.S. auctioned $30 billion of three-year notes today, and is scheduled to sell $24 billion of 10-year securities tomorrow and $16 billion of 30-year bonds the following day.

Investors are also watching debt talks in Washington. The House plans to consider a debt limit bill without conditions tonight, according to Speaker John Boehner, who said that the burden will be on the Democrats to ensure passage of the measure. Democratic leader Nancy Pelosi said she told Boehner that Democrats “would vote for a clean” debt limit.

Dollar Rates

The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, dropped 0.1 percent to 1,023.75, after touching the lowest level since Jan. 13. Australia’s dollar rallied to 90.41 cents per dollar, the highest since Jan. 14, as home prices rose at the fastest pace since 2010.

Greek 10-year bonds advanced for a seventh day, with the yield falling 21 basis points to 7.40 percent. The government sold 1.3 billion euros of 91-day bills today at a yield of 3.60 percent. That’s the lowest for three-month debt since January 2010 and compares with a rate as high as 4.68 percent in December 2011.

Portugal is selling 3 billion euros of debt maturing in 2024 via banks, according to a person familiar with the arrangement, its second bond sale this year as the nation comes toward the end of its three-year international bailout program. The 10-year yield in the secondary market rose two basis points to 5.01 percent

Michelin, Barclays

Germany’s 10-year yield was little changed at 1.69 percent. The country sold 900 million euros ($1.2 billion) of index-linked securities due in April 2018.

The Stoxx Europe 600 Index climbed 1.3 percent for a fifth straight gain, the longest streak this year that left it at the highest since Jan. 23.

A gauge of carmakers and auto-parts stocks gained the most as all 19 groups in the index advanced after Goldman Sachs Group Inc. raised its car-sales growth forecasts for western Europe, citing improved consumer confidence in the region.

Peugeot SA advanced 4.5 percent after the New York-based bank recommended buying the stock. Michelin & Cie., Europe’s largest tiremaker, gained 3.8 percent after maintaining its 2015 earnings forecast and raising its dividend.

Barclays Plc (BARC) dropped 3.8 percent after the U.K.’s second-largest lender said profit at its investment bank declined last year and announced job cuts. Alcatel-Lucent SA fell 4.4 percent after Morgan Stanley reduced its stock rating on the French network supplier.

Emerging Markets

Kazakhstan’s central bank said it would no longer defend the tenge at its previous level. The currency will be allowed to trade at 185 tenge per dollar, with a range of 3 tenge on either side, the National Bank of Kazakhstan said in an e-mailed statement today. That compares with 155.63 per dollar at the close yesterday. The Kazakhstan Stock Exchange Index jumped 12 percent, the most since February 2009 on a closing basis.

Kazakhstan’s devaluation follows Argentina as reduced Fed bond buying led to capital outflows from emerging markets. Goldman Sachs Group Inc. Chairman and Chief Executive Officer Lloyd C. Blankfein said developing nations are better able to weather an investor retreat now than in 1998. Blankfein said China’s economic growth will have “huge consequences” for global expansion prospects.

The MSCI Emerging Markets Index climbed 1.1 percent. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong jumped 2.5 percent, the most since Nov. 18. Chinese stocks will probably rally as much as 20 percent in the coming weeks as gauges of economic growth stabilize and valuations rise from historic lows, JPMorgan Chase & Co. said, recommending the country’s banking stocks.

Gas, Oil

Natural gas for March delivery rose 24.5 cents to settle at $4.824 per million British thermal units in New York, the first advance in five sessions. A winter storm may spread snow and sleet across the country’s south, the U.S. National Weather Service said.

West Texas Intermediate oil fell for the first time in six days after yesterday touching the highest level this year. WTI for March delivery fell 12 cents to settle at $99.94 in New York. A U.S. government report tomorrow will probably show that crude supplies rose for a fourth week.

To contact the reporters on this story: Callie Bost in New York at cbost2@bloomberg.net; Jeremy Herron in New York at jherron8@bloomberg.net

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

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