U.S. stocks rose, erasing an early slump, as the House approved a spending bill to avert a government shutdown. Greek and Portuguese bond yields surged to records amid concern over possible debt restructurings. Gold and silver advanced, while the dollar weakened and oil rallied.
The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,314.52 at 4 p.m. in New York, erasing a slide of as much as 0.9 percent. Portugal’s five-year yields climbed as high as 10.49 percent, while the Greek 10-year yield topped 13 percent for the first time since at least 1998. The dollar weakened against 14 of 16 major peers, while oil advanced to 0.9 percent.
Stocks reversed losses as the federal budget fight neared a close with the House’s approval of legislation to cut $38.5 billion in spending. The Senate planned to pass the measure later today. Losses in Greek bonds came after German Finance Minister Wolfgang Schaeuble told Die Welt newspaper Greece may need to renegotiate its debt, an event that Moritz Kraemer, head of S&P’s European evaluation team, said may result in a 50 percent to 70 percent “haircut” on the securities’ values.
“The government is still running,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co. “That’s a sigh of relief. Investors are focusing on the good economic fundamentals and solid corporate earnings. Yes, we do have global issues, European debt concern, higher commodities prices. Still, the stock market is very resilient.”
Supervalu Inc. led consumer-staples shares to the biggest gain among 10 groups in the S&P 500 after the company’s earnings and full-year profit forecast topped analysts’ estimates. Shares in the owner of Save-A-Lot and Albertsons grocery stores jumped 17 percent, the most in Bloomberg data going back to 1980.
Chevron Corp. and Exxon Mobil Corp. paced gains in energy producers as oil futures increased $1 to $108.11 a barrel in New York amid reports that Saudi Arabia reduced output this month.
Earlier declines in U.S. equities followed an increase in jobless claims to a two-month high of 412,000 and a slump in financial shares. Applications for jobless benefits rose 27,000 in the week ended April 9 to exceed economists’ projections for a little-changed reading of 380,000, according to the median estimate in a Bloomberg News survey.
The S&P 500 will rise to 1,525 over the next 12 months as the U.S. economy expands and corporate sales grow, Goldman Sachs Group Inc. strategist David Kostin wrote in a note dated yesterday. He favors energy and technology shares, while reducing financials to “neutral” from “overweight.” Kostin also narrowed the size of Goldman’s health-care “underweight” recommendation.
Financial shares in the S&P 500 slipped 0.9 percent collectively for the biggest decline among 10 groups.
Goldman Sachs lost 2.7 percent. Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought investments linked to mortgages without knowing the firm would benefit if they fell in value.
The extra yield investors demand to hold Portuguese 10-year bonds instead of benchmark German bunds widened to a euro-era record 550 basis points, with the Greek-German spread increasing 37 basis points to 985 basis points. Greek two-year yields jumped 90 basis points to 17.83 percent, taking this week’s advance to 155 basis points.
“That Greece may have no other alternative but to restructure in order to get itself back on the sustainable debt path is probably the worst kept secret,” said Greg Venizelos, a credit strategist at BNP Paribas SA in London.
Spanish 10-year debt yields jumped 9 basis points, with Irish yields 25 basis points higher. The 10-year bund yield slipped one basis point to 3.43 percent.
The yield gap between Treasury 2- and 30-year securities shrank to 3.78 percentage points, the narrowest in a week, as the jobless claims data unexpectedly rose and wholesale costs slowed, tempering speculation the economy is improving.
The spread contracted today as the U.S. drew higher-than-forecast demand at an auction of $13 billion of 30-year debt. A bond-market gauge that signals traders’ inflation expectations declined after a report showed producer prices increased less than forecast.
Five stocks fell for every two that gained in the Stoxx 600. Banca Popolare di Milano Scarl lost 2.7 percent, helping lead a decline in banks, as two people familiar with the situation said Italy’s oldest cooperative lender will consider a rights offer after the central bank asked it to boost capital. Reckitt Benckiser Group Plc tumbled 7.5 percent after saying Chief Executive Officer Bart Becht will step down.
The declines in the dollar were led by the Norwegian krone and Singapore dollar, which strengthened 0.8 percent and 1 percent respectively. The euro appreciated to a 15-month high versus the dollar, rising 0.3 percent to $1.4491, on bets that the European government-debt crisis will be contained and the region’s central banks will raise interest rates further.
The yen strengthened 0.4 percent versus the dollar. The pound strengthened 0.5 percent against the dollar and 0.2 percent versus the euro as a Nationwide Building Society report showed U.K. consumer confidence rose in March from a record low as Britons grew more optimistic about the outlook for the economy and spending.
China’s Shanghai Composite Index dropped 0.3 percent before government reports tomorrow that may show inflation accelerated at the fastest pace since 2008 and economic growth slowed, according to Bloomberg surveys of economists.
Russia’s Micex Index retreated 1.6 percent as companies including OAO Rosneft and OAO GMK Norilsk Nickel sank.
Gold rose for the most in a week on speculation that higher raw-material costs and record-low interest rates will spur demand for an inflation hedge. Gold for June delivery climbed 1.2 percent to $1,472.40 an ounce. May silver jumped 3.5 percent to $41.664 an ounce, the metal’s biggest gain of the year.
Lu Wang in New York at email@example.com.