U.S. Stocks, Dollar Rise After Jobs Report; Copper Drops

Photographer: Martin Leissl/Bloomberg

Mario Draghi, president of the European Central Bank (ECB), reacts whilst speaking during a news conference where he unveiled historic measures to face down inflation, in Frankfurt, on Thursday, June 5, 2014. Close

Mario Draghi, president of the European Central Bank (ECB), reacts whilst speaking... Read More

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Photographer: Martin Leissl/Bloomberg

Mario Draghi, president of the European Central Bank (ECB), reacts whilst speaking during a news conference where he unveiled historic measures to face down inflation, in Frankfurt, on Thursday, June 5, 2014.

U.S. stocks climbed to records, leading global equities higher with the dollar, after better-than-forecast hiring data boosted optimism in the world’s largest economy. Copper tumbled a fourth day.

The Standard & Poor’s 500 Index (SPX) added 0.4 percent at 4 p.m. in New York, extending an all-time high. The MSCI All-World Index advanced to within two points of its record to close at a six-year high. The dollar rose 0.1 percent to $1.36444 per euro. Ten-year Treasuries had the biggest weekly slide in three months. European bond yields dropped to all-time lows after the region’s central bank added stimulus. Russian equities capped a 20 percent rally from a March low as President Vladimir Putin met with Ukraine’s leader in France. Copper sank 1.3 percent to cap its worst week since March.

U.S. employers added 217,000 workers in May, sending payrolls past the pre-recession peak for the first time as the economy gained traction. Yields on Spanish, Belgian and Irish 10-year securities fell to all-time lows a day after the European Central Bank took deposit rates negative, the first major institution to do so, and offered liquidity to lenders to encourage credit growth.

“The market likes this steady state of economic improvement,” Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in New York, which helps manage about $1.5 billion in assets, said in a phone interview. “A really weak number would raise economic concerns that the economy is rolling over, and a too-strong number would cause concern about the Fed accelerating its tightening timetable. It’s a sweet spot for the market.”

Payroll Data

Nonfarm payrolls increased by 217,000 in May, versus 282,000 in April and a gain of 215,000 projected by economists in a Bloomberg survey. The unemployment rate held at 6.3 percent. The share of working-age people in the labor force matched a 36-year low, suggesting the recovery remains uneven.

Federal Reserve officials are watching the labor market as they move to complete their bond-purchase program late this year and start considering the timing of the first interest-rate increase since 2006. Central-bank stimulus has helped propel the S&P 500 higher by as much as 188 percent from its bear-market low in March 2009. The index has added 1.2 percent in the past five days and is poised for a third straight weekly gain.

“The data was surprisingly right on the line,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “It painted a portrait of an economy that’s growing, albeit gradually -- not too fast, not too slow. The markets have risen this week in anticipation of this, plus what happened overseas with the ECB rate movement.”

Volatility Gauge

The S&P 500 gained 1.3 percent in the past five days for a third week of gains. The equities benchmark has rebounded 7.4 percent since a selloff in small-cap and Internet shares spread to the broader market, dragging the index to a two-month low in April. The measure trades at 16.5 times the projected earnings of its members, up from a multiple of 14.8 at the start of February.

The Chicago Board Options Exchange Volatility Index (VIX) fell 8.1 percent to 10.73, the lowest level in since February 2007. Volatility is diminishing, with the VIX staying within three points of an all-time low, as confidence grew that a flood of central-bank monetary stimulus worldwide will propel the global economy, extending the five-year bull market in equities.

The U.S.’s AA+ credit rating was affirmed by Standard & Poor’s, which cited the resiliency and diversity of the economy, almost three years after downgrading the nation for the first time amid political wrangling.

Fed Chair Janet Yellen said on May 7 that “a high degree of monetary accommodation remains warranted,” and that there will be “considerable time” before the central bank raises its benchmark rate as slack in the jobs market keeps inflation below its 2 percent target.

Treasury Yields

The yield on benchmark 10-year Treasuries rose one basis point to 2.60 percent. The rate fell as much as five basis points earlier on concern about the labor participation rate, which remained at the lowest since March 1978. The rate has climbed 12 basis points this week, the most since the five days ended March 7, and rose as high as 2.64 percent yesterday, the most since May 13.

The rate on similar maturity Italian bonds slid 18 basis points to 2.75 percent. Spain’s 10-year yields fell 19 basis points to 2.63 percent, the least since Bloomberg began compiling the data in 1993.

“Even as the Fed has started to tighten its monetary policy, the rest of world is still easing,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said by phone. His firm oversees $1.1 billion. “You still have a lot of central bank liquidity being pumped into the system. There is more upside than downside in the market now.”

Global Stocks

The MSCI All-World Index advanced 0.6 percent to 426.58, 0.3 percent below its all-time high of 427.63 from October 2007. The MSCI Emerging Markets Index added 0.9 percent, extending this week’s gain to 1.7 percent.

Russia’s Micex Index rose 1 percent, capping its best week in a month and recovering 20 percent from a low on March 14. Putin held his first talks with Ukraine’s newly elected president, Petro Poroshenko, as France used the backdrop of D-Day commemorations to ease tensions over the separatist unrest in eastern Ukraine.

Mexico’s central bank unexpectedly reduced its key interest rate to a record low as the economy struggles to recover. The equities benchmark jumped 1.4 percent.

Hong Kong’s Hang Seng Index slipped 0.2 percent, erasing a weekly gain and the Shanghai Composite Index retreated 0.5 percent. The yuan traded in Hong Kong jumped the most in a week after the central bank raised the currency’s daily fixing by the most in five months.

Commodity Moves

The International Monetary Fund said yesterday China’s policy makers still have tools to keep economic growth at a medium to high level. Trade data on June 8 may show exports climbed 6.7 percent from a year earlier in May, more than April’s 0.9 percent growth, according to the median estimate in a Bloomberg News survey.

Copper fell 1.3 percent to settle at $3.051 a pound in New York. An investigation of metals storage at China’s Qingdao port will make banks cautious about commodity financing, and any lending curbs might weigh on copper, according to Macquarie Group Ltd.

West Texas Intermediate crude climbed 0.2 percent to settle at $102.66 in New York after adding as much as 0.6 percent. Investors speculated the jobs data would signal higher demand. Gold futures pared earlier declines after falling the most in a week as stock gains diminished demand for the precious metal as an alternative investment.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net; Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron, Stephen Kirkland

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