U.S. stocks rose, rebounding from yesterday’s slump, as chipmakers rallied and signs of a strengthening job market bolstered optimism the economy can withstand a surge in energy costs. Treasuries and the dollar fell. Persian Gulf shares slid to the lowest level since July.
The Standard & Poor’s 500 Index rose 0.2 percent to 1,308.44 at 4 p.m. in New York after sinking 1.6 percent yesterday. Chipmakers led gains as JPMorgan Chase & Co. raised its recommendation on the industry. Oil climbed to a 29-month high of $102.23 a barrel amid concern unrest in the Middle East will disrupt supplies. Ten-year Treasury yields rose eight basis points to 3.48 percent and the Dollar Index lost 0.5 percent.
The S&P 500 tumbled 2.7 percent from its 32-month high on Feb. 18 through yesterday amid concern surging energy prices will hurt consumer spending and corporate profits. Today’s advance came after ADP Employer Services said companies in the U.S. added 217,000 jobs last month, topping economists’ estimates, and the Federal Reserve said the labor market improved throughout the country early this year.
“This is a fairly resilient market,” said Jeffrey Davis, who oversees $5 billion as chief investment officer at Lee Munder Capital Group in Boston. “We’re in a sustainable economic recovery. Without any serious move in oil prices, you’ll probably get a market that has a firm foundation to it. In such a case, any pullback will be minor.”
Xilinx Inc., Altera Corp. and Texas Instruments Inc. rose at least 3 percent and semiconductor companies climbed the most among 24 groups in the S&P 500. Christopher Danely, an analyst at JPMorgan, raised the industry to “constructive” from “cautious” on improving economic and inventory trends.
Improvements in the labor market were driven by increasing retail sales and “solid growth” in manufacturing, the Fed said in its Beige Book report, an anecdotal account of the economy. The Labor Department will release its February jobs report in two days, with the median economist forecast in a Bloomberg survey calling for an increase of 195,000 jobs.
Equities retreated from Tokyo to London earlier as crude surged. Oil futures advanced as much as 2.8 percent as Libyan forces loyal to Muammar Qaddafi attacked rebels on the east coast where much of the country’s oil is refined and shipped abroad.
The cost of protecting corporate bonds from default in the U.S. reversed an earlier decline as the benchmark tracked oil’s rise above $100 a barrel. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, rose 0.6 basis point to a mid-price of 85.19 basis points, according to index administrator Markit Group Ltd.
The Stoxx Europe 600 Index lost 0.7 percent as more than three shares fell for every one that advanced. Daimler AG, the world’s second-largest maker of luxury cars, lost 2.8 percent, leading automakers lower. Swiss Reinsurance Co. slipped 1.9 percent after estimating $800 million of costs from the New Zealand earthquake. Celesio AG tumbled 6.2 percent after DZ Bank AG recommended selling shares of the German drug wholesaler.
The VStoxx Index, which measures the cost of protecting against a decline in the Euro Stoxx 50 Index, climbed 3.3 percent to 24.60, the highest level in almost a week.
The Bloomberg GCC 200 Index, a gauge of Persian Gulf shares, slid 3.3 percent and has tumbled 9.8 percent in four days. Saudi Arabia’s Tadawul All Share Index slumped 3.9 percent, down 15 percent in four days. The Dubai Financial Market General Index sank 3.5 percent to the lowest since June 2004 today. Credit-default swaps on Bahrain rose 16 basis points to 315 at 3 p.m. in London, according to CMA.
New Zealand’s dollar slumped against all 16 of its most-traded peers, sliding as much as 1.2 percent versus the U.S. currency to a 2011 low, after Prime Minister John Key said he expects the central bank to cut interest rates as the nation grapples with the aftermath of the deadliest earthquake in 80 years.
The extra yield investors demand to hold Greek 10-year bonds instead of benchmark German bunds rose to 888 basis points, the highest level in almost two months. S&P said the debt ratings of Greece and Portugal remain at risk of being cut on concern about how a European Union rescue fund may affect holders of the two nations’ sovereign bonds.
The ratings company kept Greece’s BB+ long-term ratings and Portugal’s A- long-term and A2 short-term classifications on creditwatch negative, according to a statement yesterday. The yield on the 10-year Portuguese security rose two basis points to 7.48 percent.