Stocks, Euro Advance as Treasuries Fall; Cattle Decline

Stocks Advance on Quarterly Reports
Traders work at the New York Stock Exchange. Photographer: Scott Eells/Bloomberg

Stocks and the euro rose as Treasuries fell amid better-than-estimated earnings and data indicating the American housing market is stabilizing. Cattle futures fell after the U.S. found a case of mad-cow disease.

The Standard & Poor’s 500 Index gained 0.4 percent at 4 p.m. New York time. Apple Inc. rallied 7 percent in late trading after second-quarter profit topped projections, while Nasdaq-100 Index futures advanced 1.4 percent at 5:29 p.m. The Stoxx Europe 600 Index added 1 percent as banks rallied 2 percent. Treasury 10-year yields added four basis points to 1.97 percent. The euro gained 0.2 percent to $1.3187. Cattle futures tumbled the most in 11 months in Chicago. Spanish and Dutch bonds rallied after the nations sold debt.

Equities recovered some of yesterday’s losses as new U.S. homes sold at a faster-than-estimated pace and companies from AT&T Inc. to 3M Co. and Juniper Networks Inc. beat analysts’ earnings projections. Yields on Spanish and Dutch bonds decreased following the auctions, easing concern that the European debt crisis is intensifying.

“Earnings have been much better than what many people expected,” Ethan Anderson, senior portfolio manager for Rehmann Financial in Grand Rapids, Michigan, said in a telephone interview. His firm manages about $2 billion. “These companies are finding ways to become more efficient and create profit. The economy is improving. Growth is very real.”

Earnings Season

More than 82 percent of S&P 500 companies that reported quarterly results since April 10 topped the average analyst earnings estimate, according to data compiled by Bloomberg. The U.S. Commerce Department said today that sales of new homes were at an annual rate of 328,000 in March, compared with the median economist estimate of 319,000 in a Bloomberg survey.

Stocks fell around the world yesterday, while the euro weakened and commodities retreated, as Europe’s backlash against budget cuts gained momentum. Dutch Prime Minister Mark Rutte offered his cabinet’s resignation amid a revolt against spending cuts. French President Nicolas Sarkozy lost the first round of his re-election bid as the anti-euro National Front won a record share of the vote.

Markets recovered today after Spain sold 1.9 billion euros ($2.5 billion) of bills, while the Netherlands auctioned 2 billion euros of securities. Yields on Spanish 10-year debt fell 14 basis points to 5.86 percent. Rates on similar-maturity Dutch notes slipped 10 basis points to 2.33 percent. Yields on 10-year German bunds climbed to 1.70 percent after declining to a euro-era low of 1.63 percent yesterday.

AT&T, 3M

Seven of 10 S&P 500 industries advanced today, led by telephone stocks. AT&T rallied 3.7 percent. The largest U.S. phone company posted first-quarter earnings that beat analysts’ estimates on lower smartphone upgrade costs and an increase in wireless data sales related to Apple’s iPad.

3M, the maker of Post-it Notes and fuel system tuneup kits, advanced 1.6 percent after posting first-quarter profit that beat analysts’ estimates because of rising U.S. auto and industrial demand.

Juniper Networks surged 7.3 percent after its quarterly report was released early on the company’s website. The second-largest maker of networking equipment reported first-quarter profit of 16 cents excluding some items, beating the average analyst estimate of 13 cents, according to data compiled by Bloomberg.

Apple’s Report

Apple, which slumped 2 percent during the regular trading session, rallied as high as $604.22 after the world’s largest company by market value beat earnings estimates. The shares had retreated 12 percent since April 9, when they closed at $636.23.

Apple said profit almost doubled last quarter, reflecting robust demand for the iPhone in China as well as purchases of a new version of the iPad tablet, allaying the concerns that fueled a 12 percent two-week slump in the stock.

Cattle fell after the U.S. Department of Agriculture found a case of mad-cow disease in a dairy cow in central California. Its meat didn’t enter the food chain, according to John Clifford, the department’s chief veterinarian.

Futures for June delivery fell by the exchange limit of 3 cents, or 2.6 percent, to settle at $1.11575 a pound at 1 p.m. on the Chicago Mercantile Exchange. That’s the lowest level since July 1 and the biggest percentage drop on a most-active contract since May 23. Corn, used in livestock feed, also slumped. Futures dropped 0.7 percent to close at $6.08 a bushel at 1:15 p.m. on the Chicago Board of Trade.

This is the fourth confirmed case of the brain-wasting disease in the U.S. cattle herd since the first was discovered in December 2003 in an animal that came from Canada.

Yields on benchmark 10-year Treasuries notes rose for the first time in a week after the U.S. sold $35 billion of two-year securities and Federal Reserve policy makers began a two-day meeting.

More Auctions

The notes drew a yield of 0.270 percent, compared with a forecast of 0.278 percent in a Bloomberg News survey of nine of the Fed’s 21 primary dealers, as investors continue to seek the safest assets. Treasury will sell $35 billion in five-year notes tomorrow and $29 billion of 10-year debt the next day.

Dutch bonds rose for the first time in four days amid optimism the collapse of its government yesterday won’t derail efforts to implement budget cuts. Two-year Dutch yields dropped the most in almost five months as the government auctioned securities due in 2014 and 2037.

Spanish bonds gained as the country sold close to its maximum target at a bill sale. German bunds fell, pushing 10-year yields up from yesterday’s record low, as stocks gained and a report showed U.S. new home sales were stronger than economists forecast, undermining demand for the safest assets.

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