Dow Average Reaches Record, Oil Gain Boosts Energy Shares

Photographer: Pete Marovich/Bloomberg

Janet Yellen, chair of the U.S. Federal Reserve. U.S. data showed signs of steady progress in the labor market and improving investor confidence, a day after Fed Chair Janet Yellen said she expects rates to stay near zero for a “considerable time” after the bond-buying program is ended. Close

Janet Yellen, chair of the U.S. Federal Reserve. U.S. data showed signs of steady... Read More

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Photographer: Pete Marovich/Bloomberg

Janet Yellen, chair of the U.S. Federal Reserve. U.S. data showed signs of steady progress in the labor market and improving investor confidence, a day after Fed Chair Janet Yellen said she expects rates to stay near zero for a “considerable time” after the bond-buying program is ended.

U.S. stocks rose, with benchmark indexes extending records amid optimism over the economy, as deal activity spurred a rally in health-care shares and energy producers gained with oil prices. Copper advanced a sixth day.

The Standard & Poor’s 500 Index (SPX) added 0.2 percent to 1,962.91 at 4 p.m. in New York and the Dow Jones Industrial Average (INDU) climbed 0.2 percent to an all-time high. Shire Plc surged 17 percent as AbbVie Inc. weighed a higher offer for the European drugmaker. Emerging-market shares completed their first weekly drop in June on concern higher oil costs will curb growth. Copper capped the longest rally in six months and coffee advanced for its best day in a month.

U.S. and European stocks rallied this week after the Federal Reserve said interest rates will remain low as the economic recovery shows signs of accelerating. Commodities led by oil rose for a second week as President Barack Obama said he’s sending U.S. military advisers to assist the Iraqi army battle an insurgency and is prepared to take more action.

“This is an energy bunny sort of market that wants to keep marching higher and for a good reason,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, which oversees $120 billion, said by phone. “The U.S. economy is showing varying signs of improvement. Earnings are rising, interest rates are low and inflation is elevated, but not at extremes. That’s a favorable environment for equities to march higher.”

Weekly Gain

The S&P 500 has climbed 1.4 percent this week. The index has closed higher six straight days, its longest streak since April. The gauge is trading at 16.6 times the projected earnings of its members, up from 15.5 times at the beginning of the year.

Fed Chair Janet Yellen emphasized the need to put more Americans back to work and downplayed concerns about asset-price bubbles and incipient inflation.

Among stocks moving, CarMax Inc., the biggest U.S. auto dealer by market valuation, surged 17 percent after its profit and revenue topped estimates on higher vehicle sales. AutoNation Inc. added. 5.1 percent. Oracle Corp. slid 4 percent to lead an index of technology shares lower after reporting fourth-quarter profit and sales that fell short of analysts’ estimates.

Five out of 10 main industries in the S&P 500 advanced today, with energy shares adding 1 percent for the biggest increase. Drug companies rallied amid the AbbVie discussions. Cross-border deals are accelerating as U.S. companies seek lower taxes and ways to spend almost $2 trillion protected from U.S. taxes in cash abroad. Merck & Co. increased 1.1 percent and Eli Lilly & Co. climbed 3.6 percent to pace gains.

European Equities

The Stoxx 600 finished little changed, paring gains in the final minutes of trading to trim a weekly gain to 0.3 percent. AbbVie Inc. is considering raising ts takeover bid for Shire Plc a fourth time after the European drugmaker rejected its latest offer for about $46.5 billion, said two people with knowledge of the matter.

TSB Banking Group Plc rallied 12 percent on its first day of trading. Lloyds Banking Group Plc sold a 35 percent stake in the lender, more than the 25 percent it had planned, because of strong demand from investors.

“We’re still overweight global equities,” said Kelvin Tay, chief investment officer for South Asia Pacific at UBS Wealth Management. “Where risk assets are concerned, you tend to benefit from low interest rates, and from the Fed’s statement, we don’t think that interest rates are going to go up anytime soon. There is some concern that the situation in Iraq could escalate and bring oil prices up another notch.”

Ukraine Tension

The MSCI Emerging Markets Index slid 0.5 percent, bringing this week’s loss to 0.4 percent. Russia’s equities ended two days of gains as fighting erupted between Ukrainian government troops and insurgents.

The Micex fell 0.6 percent, pushing its weekly decline to 1 percent. After the market closed, Ukraine announced a week-long unilateral cease-fire in its easternmost regions. Earlier, NATO condemned Russia for massing new troops in a move that cast a pall over talks.

Gilts fell as Barclays Plc brought forward its forecast for the first increase in Bank of England interest rates to this year from the second quarter of 2015. The 10-year yield increased three basis points to 2.76 percent, after reaching 2.79 percent on June 13, the highest since March 11.

German 10-year yields increased two basis points to 1.34 percent. Italy’s rose three basis points to 2.95 percent.

The S&P GSCI index of 24 commodities added 0.1 percent for a seventh day of gains, the longest streak in 11 months that left the gauge at the highest level since February 2013. West Texas Intermediate crude climbed 0.8 percent to $107.26, the highest settlement since Sept. 18. Brent crude slipped 25 cents to close at $114.81 a barrel in London, trimming a second weekly gain.

Copper for delivery in three months rose 1.4 percent to settle at $6,820 a metric ton in London, the biggest gain since May 12. Zinc rose to a 16-month high on concern supply will remain tight amid shrinking inventories.

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

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