Most U.S. stocks rose, following the biggest weekly decline of the year, as Citigroup Inc. led banks higher and stronger-than-forecast growth in retail sales bolstered optimism in the economy. Treasuries trimmed earlier gains and the Dollar Index retreated.
The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,369.57 at 4 p.m. in New York while the Dow Jones Industrial Average increased 71.82 points to 12,921.41. About six stocks rose for every five that fell on U.S. exchanges. Ten-year Treasury yields lost less than one basis point to 1.98 percent and the dollar weakened against 10 of 16 major peers as the euro rose 0.5 percent to $1.3142, reversing a 0.6 percent earlier loss. Spanish 10-year bond yields increased nine basis points to 6.07 percent and jumped as much as 18 basis points.
Citigroup led U.S. banks higher after reporting fixed-income trading revenue more than doubled from the fourth quarter. Commerce Department data showed retail sales increased 0.8 percent in March, almost triple the median forecast of economists in a Bloomberg survey. Equities recovered after most stocks fell earlier as gains in Spanish and Italian bond yields fueled concern Europe’s debt crisis was worsening.
“The U.S. is a better economic story,” said Madelynn Matlock, who helps oversee about $14.6 billion at Huntington Asset Advisors in Cincinnati. “Retail sales showed that consumers are not being overwhelmed by gas prices. On top of that, corporate earnings should be at least respectable.”
The S&P 500 rebounded after tumbling 2 percent last week, its biggest drop of the year. Travelers Cos., Procter & Gamble Co. and Home Depot Inc. rose more than 1.4 percent to lead gains in the Dow. Citigroup Inc. climbed 1.8 percent as 23 of 24 stocks in the KBW Bank Index advanced.
Apple Inc. tumbled 4.2 percent, the most since October, and Google Inc. fell 3 percent as technology shares had the biggest decline among the 10 main S&P 500 groups.
Apple slid for a fifth day, the longest losing streak in six months, amid speculation that demand for the iPad may wane and that mobile-phone carriers will cut subsidies for the iPhone. The stock has lost almost 9 percent since closing at a record high of $636.23 on April 9.
Nasdaq OMX Group Inc. said late on April 13 that Texas Instruments Inc. will replace First Solar Inc. in the Nasdaq-100 Index, the basis for this year’s fifth-most-traded U.S. exchange-traded fund. Because Texas Instruments has a larger market capitalization than First Solar, other stocks in the index are likely to see their proportion shrink, according to Dave Lutz, head of ETF trading and strategy at Stifel Nicolaus & Co.
Apple influences the price of the Nasdaq-100 more than any other stock, accounting for almost 19 percent of its value, according to data compiled by Bloomberg. That’s double Microsoft Corp.’s weighting. Lutz, based in Baltimore, said in an e-mail that Apple shares may be down in part because of Nasdaq OMX’s decision.
“Apple is ubiquitous, it’s well-owned, it’s had a huge run up and people are taking some profits,” Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati, said in a telephone interview. “If you’re concerned about the market being choppy, you look at positions that had the biggest gains and Apple would clearly be one of those candidates.”
U.S. stocks started the session higher, with the S&P 500 climbing as much as 0.7 percent, as Commerce Department data showed U.S. retail sales rose 0.8 percent in March, topping the median economist estimate for 0.3 percent growth.
Stocks Versus Bonds
Treasury yields below zero on an inflation-adjusted basis for only the second time since Dwight D. Eisenhower’s presidency have split Wall Street’s biggest firms, underscoring the relative-value dilemma equity investors face following the biggest first-quarter rally in 14 years.
For Goldman Sachs Group Inc.’s Peter Oppenheimer, U.S. stocks offer a once-in-a-generation buying opportunity after yields on 10-year Treasuries fell to about minus 0.3 percent when the rate of inflation is deducted. Morgan Stanley’s Adam Parker advises caution, saying Federal Reserve stimulus that has led the fixed-income rally can’t last forever.
U.S. 30-year bonds erased gains, with the yield little changed at 3.13 percent after falling as much as four basis points. Rates on two-year notes were little changed at 0.27 percent.
‘One Eye’ on Europe
“At least one eye is back on Europe,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. “It’s hard to be short Treasuries. You have to be a bit cautious,” he said. “The question is what matters more, what happens here or what happens in Europe.”
The dollar weakened more than 0.6 percent versus the Japanese yen and Norwegian krone. The yuan slid after China doubled the currency’s trading band against the dollar for the first time since 2007.
Auto companies and chemical producers led gains in the Stoxx Europe 600 Index, which climbed 0.3 percent. Vestas Wind Systems A/S rallied 13 percent in Copenhagen as Jyllands-Posten reported that Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co. are considering a bid for the wind-turbine maker.
Spain’s bonds declined as Jaime Garcia-Legaz, a deputy in the Economy Ministry, called on the European Central Bank to buy the nation’s debt to help stem financial-market turmoil. Spain is scheduled to sell bonds tomorrow and on April 19 as the cost of insuring its debt against default touched a record.
The yield on the German 10-year bund retreated two basis points to 1.72 percent. The difference in yield between Spanish 10-year bonds and German securities, Europe’s benchmark, was 11 basis points higher at 435 basis points, or 4.35 percentage points, after earlier widening by as much as 20 by points. The Italian-German yield gap widened by nine basis points to 3.88 percent. French 10-year bonds declined, with the yield advancing seven basis points to 3.02 percent.
Credit-default swaps on Spain jumped nine basis points to 511 after reaching 521 earlier, according to CMA. Contracts on Italy rose about seven basis points to 441, the highest level in almost three months.
Among commodities tracked by the S&P GSCI Index, nickel, gasoline and cotton fell at least 2.5 percent to lead declines among 16 of 24 materials.
Crude oil gained 10 cents to $102.93 a barrel in New York. The reversal date of the Seaway crude pipeline was moved up, causing the spread between New York-traded futures and Brent in London to narrow to the least since February. Enbridge Inc. and Enterprise Products Partners LP said they would start moving oil from Cushing, Oklahoma, to the U.S. Gulf Coast via the pipeline in May.
Speculators cut bullish wagers on commodities by the most in 2012 on mounting concern that slowing growth in China will curb gains in demand. Money managers lowered net-long positions across 18 U.S. futures and options by 9.3 percent to 1.01 million contracts in the week ended April 10, the biggest reduction since Dec. 20, data from the Commodity Futures Trading Commission show. Copper holdings tumbled 84 percent, the most since November.