Stocks, Commodities, Euro Gain on Earnings, German Data

Stocks, Commodities, Euro Gain on Earnings
Traders work at the New York Stock Exchange. Photographer: Scott Eells/Bloomberg

Stocks extended a weekly advance after earnings beat estimates at companies including General Electric Co. and Microsoft Corp. and German business confidence unexpectedly improved. Commodities gained and the euro strengthened while Treasuries were little changed.

The Standard & Poor’s 500 Index climbed 0.1 percent at 4 p.m. in New York, paring a gain of as much as 0.8 percent as Bank of America Corp. slumped and Apple Inc.’s retreat since April 9 grew to 9.9 percent. The Dow Jones Industrial Average added 65.16 points. The Stoxx Europe 600 Index rose 0.5 percent and the euro appreciated 0.6 percent to $1.3212. Oil added 0.8 percent to $103.05 a barrel. Ten-year Treasury yields were little changed at 1.96 percent after gaining three basis points.

Microsoft contributed the most to the S&P 500’s advance and GE was the fourth-biggest influence after they reported profit that exceeded the average analyst estimate. Germany’s Ifo institute said its business climate index rose to 109.9, a nine-month high, adding to evidence Europe’s largest economy can weather the debt crisis. Economists forecast a drop, a Bloomberg survey showed.

“On the back of some weaker recent economic data, the earnings story continues to showcase that companies can wring out some profits here,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “Most companies now understand the environment, so they’ve acclimated to a fairly modest recovery, but a recovery nonetheless. They’ve figured out how to manage their businesses accordingly.”

Market Leaders

The S&P 500 posted a weekly gain of 0.6 percent after slumping two straight weeks. Health-care companies, consumer-staples stocks, utilities and telephone operators, among the industries considered least dependent on economic growth for earnings, led gains this week after reports on home sales and jobless claims tempered optimism in the economy.

The index tumbled 4.3 percent from an almost four-year high on April 2 through April 10 amid concern Europe’s debt crisis was spreading and China’s economic growth was slowing. It has rebounded 1.5 percent since then and is up almost 10 percent for the year.

GE rose 1.2 percent after earnings were helped by profit growth in its energy infrastructure business. First-quarter adjusted profit of 34 cents per share was higher than the average 33 cents estimated in a Bloomberg survey. Schlumberger Ltd., the world’s largest oilfield-services provider, climbed 2.7 percent after profit rose 38 percent as the number of U.S. rigs drilling for oil reached a record. Microsoft surged 4.6 percent as better-than-estimated sales of Windows and Office software for businesses.

Earnings Season

Among other stocks rallying after reporting earnings, Hanesbrands Inc., Honeywell International Inc. and McDonald’s Corp. gained. SanDisk Corp. tumbled 11 percent after forecasting second-quarter sales that fell short of some analysts’ estimates. Tempur-Pedic International Inc. sank 21 percent after the maker of luxury mattresses reaffirmed its forecasts for earnings and sales in 2012, which fell short of analysts’ estimates.

U.S. stocks pared gains in the afternoon as Apple and Bank of America led technology and financial shares lower. Apple lost 2.5 percent, falling for the eight time in nine days. Bank of America slumped 4.7 percent after Michael Mayo, an analyst at Credit Agricole Securities, advised selling the shares.

A Stoxx 600 gauge of banks rallied 1.1 percent to help lead gains among the 19 industry groups. Societe Generale SA gained 3.5 percent as Bank of America upgraded the shares. The Stoxx 600 rose 1.7 percent this week, following four consecutive weeks of losses.

Euro, Pound

The euro rose 0.5 percent against the yen, climbing for the fourth consecutive day. The pound appreciated 0.5 percent to $1.6131 after a report showed U.K. retail sales increased at the fastest pace for more than a year last month. The FTSE 100 Index added 0.5 percent.

The S&P GSCI gauge of commodities gained 0.6 percent. Copper climbed 1.9 percent to $3.7065 a pound. Copper traders are bullish for the first time in six weeks on mounting confidence that demand will accelerate in line with economies at a time when mining companies are already failing to keep up with consumption. Eleven of 29 analysts surveyed by Bloomberg expect the metal to climb next week and 10 were neutral.

The Shanghai Composite Index in China reached its highest level in more than a month amid speculation of a reserve ratio cut in the coming weeks. A cut in reserve-requirement ratios may be a first option as China eases monetary policy, the China Securities Journal reported today, without citing anyone. Investors expect easing even as limited loosening over the past four months indicates leaders want to maintain a clampdown on inflation and property prices.

Emerging Markets

The MSCI Emerging Markets index drifted between gains and losses, falling 0.1 percent at the end of the day. The Kospi in South Korea dropped 1.3 percent and Taiex in Taiwan retreating 1.5 percent. Russia’s Micex added 0.6 percent, as Turkey’s ISE National 100 Index climbed 0.5 percent.

Europe’s governments were told the onus for fixing their debt woes lies with them as the Group of 20 warned the two-year crisis still threatens global growth. With finance chiefs from the G-20 meeting today in Washington, those from Canada and Australia joined the IMF and U.S. in pressing Europe to intensify efforts to quell the turmoil as it spreads to Spain. The G-20 cited “the situation in Europe” first in a list of drags on the world economy, according to a draft statement obtained by Bloomberg News.

The yield on the 10-year Spanish bond was up four basis points at 5.96 percent after earlier rising to more than 6 percent for the third day this week, with the similar-maturity Italian yield climbing five basis points to 5.66 percent.

Credit-default swaps on Spain touched a record and the cost of insuring French and Italian government debt climbed to the highest levels since January as countries struggle to tame their budget deficits. Swaps on Spanish debt jumped as much as 16 basis points to a record 514, before reversing gains and trading little changed at 501.

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