S&P 500 Gains as European Yields Fall While Gold Rebounds

The Standard & Poor’s 500 Index (SPX) closed above 2,000 for the first time as data on durable goods and consumer confidence boosted optimism in the economy’s strength. European bond yields dropped to records for a second day, while gold and oil rose.

The S&P 500 rose 0.1 percent to 2,000.02 and the Dow Jones Industrial Average (INDU) jumped 0.2 percent to 17,106.70 at 4 p.m. in New York. Both indexes pared gains after reaching intraday highs. Italy’s (GBTPGR10) 10-year yield slid 7 basis points to 2.41 percent, and Spain’s rate dropped to 2.17 percent. The Stoxx Europe 600 Index added 0.7 percent, and the MSCI Emerging Markets Index increased to the highest since 2011. The euro fell to its lowest in almost a year versus the dollar. Gold rebounded 0.5 percent and oil advanced 0.6 percent.

Orders for U.S. durable goods jumped in July by the most on record as bookings surged for commercial aircraft, while consumer confidence reached the highest level in almost seven years. Treasury two-year notes yield the most versus similar-maturity German debt since 2007 amid signs of a U.S. recovery and speculation of more stimulus from the European Central Bank. The presidents of Russia and Ukraine began talks in Minsk, Belarus, today as tensions flare in the region.

“There is a little bit of caution in the market as it had such a big day yesterday, but you’re still going to have investors and traders that are going to go in and grab any opportunities,” Quincy Krosby, a market strategist at Newark, New Jersey-based Prudential Financial Inc., which manages more than $1 trillion, said via phone.

Record Levels

The S&P 500 yesterday gained 0.5 percent as corporate dealmaking and prospects for economic stimulus in Europe bolstered confidence in the bull market. The Dow today climbed above a previous intraday record reached July 17. The Nasdaq Composite Index is trading at the highest level since 2000. The Russell 2000 Index of smaller companies soared 0.8 percent.

The Nasdaq Biotechnology Index jumped 1.2 percent today to a record, completing a rebound after a 21 percent decline from February through April amid concern that earnings don’t justify their share prices.

The S&P 500 has advanced for the past three weeks and more than $1 trillion has been added to the value of American equities since a two-month low on Aug. 7 amid speculation central banks will continue to keep interest rates near zero even as the economy strengthens.

Bookings for goods meant to last at least three years climbed 22.6 percent after a 2.7 percent gain in June that was bigger than previously reported, data from the Commerce Department showed today in Washington. A 0.5 percent drop in orders for non-military capital goods excluding aircraft last month followed a June increase of 5.4 percent.

Consumer Confidence

The Conference Board’s consumer confidence index rose to 92.4 in August, the highest since October 2007, from a revised 90.3 a month earlier, the New York-based private research group said today. The median forecast in a Bloomberg survey called for 89.

Tim Hortons Inc. jumped 8.3 percent after Burger King Worldwide Inc. agreed to acquire the company in a C$12.5 billion ($11.4 billion) deal. Burger King slid 5.1 percent after rallying 20 percent yesterday. Amazon.com Inc. added 2.6 percent after the company said it’s buying video-game service Twitch Interactive Inc. in one of its biggest-ever acquisitions. Best Buy Co. dropped 6.8 percent after posting a sales decline that was steeper than analysts had projected.

The Stoxx 600 climbed to the highest level since July 24. More than four shares advanced for every one that declined, with trading 12 percent below the 30-day average, data compiled by Bloomberg show.

Bond Yields

WPP Plc (WPP) added 1.4 percent as the advertising agency posted first-half sales that beat analysts’ estimates. Eurazeo SA gained 2.2 percent after its chairman said the French buyout firm is considering some initial public offerings. ArcelorMittal climbed 4.4 percent after UBS AG recommended buying the stock.

Spanish 10-year yields tumbled for a sixth day, the longest streak of declines since March. Italy’s yield dropped as low as 2.40 percent.

The rate on 10-year Treasuries rose 1 basis point to 2.39 percent.

The U.S. sold $29 billion of two-year notes at close to the highest yield in three years, less than a week after Federal Reserve Chair Janet Yellen said interest-rate increases may come sooner than forecast.

The securities drew a yield of 0.530 percent, compared with a forecast of 0.533 percent in a Bloomberg News survey of five primary dealers. The notes attracted a high yield of 0.544 percent in July, the most since May 2011.

‘Trickle Higher’

“The front end will trickle higher as we get closer to a Fed hike,” said Justin Lederer, an interest-rate strategist in New York at Cantor Fitzgerald LP, one of 22 primary dealers that bid on Treasury debt sales.

The euro fell versus the dollar on speculation the ECB will increase monetary stimulus while the U.S. moves toward interest-rate increases. The euro dropped 0.2 percent to $1.3169, touching the lowest level since Sept. 9, 2013. Europe’s shared currency traded down 0.2 percent at 137.02 yen. The dollar unchanged at 104.05 yen.

The MSCI All-World Country Index increased 0.2 percent to the highest level since July 24.

Emerging Markets

The MSCI Emerging Markets Index added 0.2 percent after closing yesterday at a three-year high. Turkish stocks surged the most globally, rallying 1.9 percent, after Yeni Safak newspaper reported incoming Turkish Prime Minister Ahmet Davutoglu has decided to keep Deputy Prime Minister Ali Babacan in the cabinet, sparking bets the country’s economic policy won’t be disrupted.

Russia’s Micex slipped 0.8 percent and the ruble was little changed. Ukraine’s benchmark equity gauge declined 1.1 percent.

Russian President Vladimir Putin met his Ukrainian counterpart, Petro Poroshenko, to try to ease tension between the two countries after five months of separatist unrest as violence flared on their border.

“Complicated” talks were held today, with the sides at times presenting “radically different” positions at a summit of the Russian-led Customs Union in Minsk, Belarus, according to that country’s president, Aleksandr Lukashenko. Putin began a bilateral meeting this evening with Poroshenko, who wants more talks tomorrow, he said.

The Shanghai Composite Index (SHCOMP) fell for a second day, losing 1 percent, amid concern new initial public offerings may divert funds from existing equities.

Gold climbed 0.5 percent to $1,285.2 an ounce, after trading near the lowest since June yesterday. West Texas Intermediate oil rose 0.6 percent to $93.86, rebounding from a seven-month low.

To contact the reporters on this story: Elena Popina in New York at epopina@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net Jeff Sutherland, Stephen Kirkland

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