S&P 500 Climbs to Record as Treasuries Fall, Oil Tumbles

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Photographer: Ralph Orlowski/Bloomberg

A financial trader uses a telephone as she works on computer screens at the Frankfurt Stock Exchange in Frankfurt.

The Standard & Poor’s 500 Index climbed to a record as consumer and technology shares rallied while Treasuries fell after manufacturing data boosted optimism in the economy. Emerging-market stocks rose and oil tumbled.

The S&P 500 increased 0.7 percent to a record 1,885.52 at 4 p.m. Yields on 10-year Treasury notes added four basis points to 2.76 percent. The Stoxx Europe 600 Index gained 0.6 percent. Emerging-market shares rose for an eighth day, for the longest rally in 15 months, with equities in Shanghai snapping a four-day decline. The euro strengthened more than 0.2 percent against the dollar. Commodities fell the most in three months as crude oil and natural gas tumbled.

Manufacturing in the U.S. expanded at a faster pace in March as gains in production and orders showed the industry was mending at the close of a winter-depressed first quarter. Growth in euro-area manufacturing stayed close to the highest level in almost three years in March. Manufacturing indexes pointed to weakness in China’s economy as leaders contemplate whether to add stimulus.

“As we head into April and new highs potentially on the horizon, it is looking like the bulls once again are taking control,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, wrote in an e-mail. “March was a tale of two markets, as the S&P 500 held up well, but areas like tech and small caps were hit very hard. After a very rough March, those areas are seeing well-deserved, oversold bounces.”

1,880 Level

The S&P 500 climbed 1.3 percent in the first quarter, its fifth straight gain. Today marks the fifth time in the past month the index climbed above 1,880. The previous four times, the gauge was unable to maintain that level by the end of the session. The measure reached its previous closing high of 1,878.04 on March 7.

Eight of 10 main industries in the S&P 500 advanced today, with consumer-discretionary shares adding 1.4 percent to lead gains. The Russell 2000 Index of small companies added 1.3 percent after a 1.8 percent rally yesterday. The gauge sank 3.5 percent last week and lost 0.8 percent in March.

The Nasdaq Composite Index surged 1.6 percent. The gauge of technology stocks plunged 2.5 percent in March for its worst month since October 2012.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as VIX, retreated 5.5 percent to 13.12 today, the lowest since Jan. 22.

‘Considerable Slack’

The benchmark index added 0.5 percent yesterday after Fed Chair Janet Yellen said the central bank’s unprecedented monetary stimulus would be needed for “some time” because of “considerable slack” in the labor market. The government’s monthly jobs report is scheduled for April 4.

Reports from hiring to factory output had shown weakness this year as freezing temperatures and mountains of snow kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders.

The Institute for Supply Management’s index increased to 53.7 from 53.2 a month earlier, the Tempe, Arizona-based group’s report showed today. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 54.

“People are looking for confirmation that the weakness we saw earlier in the year was, in fact, weather-related,” Walter Todd, who oversees about $990 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said by phone. “Seeing better data confirms that it was a temporary slowdown in the economy and we should see a pickup.”

Bonds Drop

Treasuries fell, pushing 30-year bond yields up for a third day for the first time in three weeks. The yield climbed six basis points to 3.61 percent. The yield curve between 30- and two-year Treasuries steepened for a third day amid bets on increased growth.

Treasuries lost 0.3 percent in March, according to the Bloomberg U.S. Treasury Bond Index, amid bets a strengthening economy may prompt an increase in interest rates. It was the first monthly decline since December.

The Stoxx 600 rose for a sixth day, the longest streak since Feb. 12. The index gained 1.8 percent last quarter for a sixth increase in seven quarters. Benchmark gauges in Greece, Portugal and Italy have surged at least 14 percent this year, posting the best performances by developed markets.

Gauge of banks and automakers led today’s rally, with 15 of 19 industry groups advancing. Alstom SA jumped 8.1 percent after the French maker of trains and power equipment agreed to sell a unit to investment firm Triton. Metso Oyj soared 19 percent after British pressure pump manufacturer Weir Group Plc proposed a merger with the Finnish maker of rock crushers.

Emerging Markets

The MSCI Emerging Markets Index advanced 0.6 percent. The Shanghai Composite Index increased 0.7 percent. Chinese manufacturing gauges pointed to weakness in the world’s second-biggest economy that could prompt the Communist Party leadership to roll out additional support measures.

A Purchasing Managers’ Index fell to 48 in March, the lowest reading since July, from 48.5 in February, HSBC Holdings Plc and Markit Economics said today. A separate PMI from the government, with a larger sample size, was at 50.3 from 50.2 the previous month.

Russia’s Micex Index erased losses to advance 0.5 percent, while Ukrainian stocks rallied 4.8 percent.

“There’s been a negative view on emerging nations, but now expectations are mounting that China will add to economic stimulus,” said Takashi Miyazaki, general manager of strategic research at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest bank. “It seems like Russia won’t take more aggressive moves in Ukraine. So the market sentiment is improving from the extreme risk-off mode.”

Ukraine Crisis

NATO said it will recommit to defending frontline states in eastern Europe that have been unsettled by the seizure of Crimea as the alliance reported no signs of a Russian troop pullback from Ukraine’s borders.

German Chancellor Angela Merkel spoke to Russian President Vladimir Putin yesterday and said he had ordered a partial withdrawal. Interfax cited Russia’s Defense Ministry as announcing that a motorized battalion was being pulled out.

Secretary General Anders Fogh Rasmussen said allied intelligence hasn’t picked up evidence of Russia scaling back its “massive military buildup” and pledged to shore up the alliance’s eastern defenses.

The euro advanced 0.2 percent to $1.3795, strengthening for a third day, and climbed 0.6 percent to 143.01 yen after a German report showed unemployment fell more than economists forecast. Japan’s currency weakened 0.4 percent to 103.67 per dollar.

Commodities Slump

The S&P GSCI (SPGSCI) gauge of 24 commodities declined 1.2 percent, the most since Jan. 2.

West Texas Intermediate oil dropped 1.8 percent to $99.74 a barrel. U.S. crude stockpiles probably rose by 2.5 million barrels last week to the highest level since November, according to a Bloomberg News survey before government data tomorrow.

Natural gas lost 9.5 percent, slumping for a third day, as forecasts showed warmer weather that would limit demand for the heating fuel.

Gold futures slipped 0.3 percent to $1,280 an ounce after touching $1,277.40, the lowest since Feb. 11 as the rally in equities crimped demand for the precious metal as a haven asset. The metal fell for a fifth session, the longest slide in more than four months.

Copper rose for the third time in four days, gaining 0.3 percent, on speculation that China will stoke its economy.

Corn advanced 1.1 percent to the highest level since July after entering a bull market yesterday as the U.S. government said supplies are more limited than expected.

To contact the reporters on this story: Joseph Ciolli in New York at jciolli@bloomberg.net; Callie Bost in New York at cbost2@bloomberg.net

To contact the editors responsible for this story: Stuart Wallace at swallace6@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net Jeff Sutherland

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