Stocks Rise as Commodities Rebound While Treasuries Drop

Europe Stocks, Euro Fall Before German Data as Asian Shares Gain
A visitor stands and watches stock index information displays at the Madrid Stock Exchange in Madrid. Photographer: Angel Navarrete/Bloomberg

The Standard & Poor’s 500 Index rose for a fourth day as commodities rebounded and Hewlett-Packard Co. paced gains in technology shares after boosting its forecast, helping the market recoup early losses. Treasuries fell as a 10-year note sale drew the weakest demand since 2009.

The S&P 500 rose less than 0.1 percent to 1,402.22 at 4 p.m. in New York, erasing a loss of as much as 0.4 percent and closing at a three-month high. The Stoxx Europe 600 Index gained 0.2 percent after dropping 0.7 percent. Ten-year Treasury note rates climbed to a five-week high following the $24 billion auction. Oil slipped after U.S. Energy Department data showed weakening fuel demand, while corn and cattle jumped more than 1 percent to lead commodities higher.

Hewlett-Packard jumped 2.4 percent to lead the Dow Jones Industrial Average up 7 points to 13,175.64, the highest level since May 3, after boosting its profit outlook and announcing a restructuring of its ailing enterprise-services division. U.S. equities followed European shares lower in early trading after German exports dropped 1.5 percent in June from the previous month and industrial production decreased, while Dallas Federal Reserve Bank President Richard Fisher said global central banks may not have the capacity to provide more stimulus.

“The corporate side looks pretty good still,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in a telephone interview. His firm oversees $12 billion in assets. “Earnings are done for the most part. Now people are scratching their heads. The market has fallen into a bit of a buy-the-dip mentality at this point.”

Above 1,389

The S&P 500 has rebounded almost 10 percent from a five-month low on June 1. The rally brought the index almost 1 percent above 1,389, which is the average year-end forecast among Wall Street strategists.

Equities opened the session lower as the remarks from the Fed’s Fisher damped speculation of further monetary easing. The S&P 500 rose yesterday as Fed Bank of Boston President Eric Rosengren said the central bank should pursue an “open-ended” easing program of “substantial magnitude.”

U.S. stocks are in a “make-or-break situation” that will probably lead to either large gains or losses, according to technical analysts at UBS AG. After climbing through the 1,390 level, the S&P 500 may go on to test the highs reached in March and May, Michael Riesner and Marc Mueller in Zurich wrote in a report dated yesterday. A drop below 1,325 would indicate a retreat to the early-June low of 1,266. That would be an almost 10 percent slide.

Market Leaders

Consumer-staples providers, commodity producers and technology shares led gains among the 10 main groups in the S&P 500, while consumer-discretionary, industrial and financial companies declined.

Dean Foods Co. surged 41 percent today, the most since it went public in 1996, as its WhiteWave unit filed to raise $300 million in a U.S. initial public offering. McDonald’s Corp., the largest restaurant chain, retreated 1.7 after global sales were unchanged in July. Inc., the biggest U.S. online travel agency by market value, tumbled 17 percent after forecasting earnings that missed projections.

About three stocks dropped for every two that advanced in the Stoxx Europe 600 Index. Of the 229 companies in the equity benchmark that have reported second-quarter earnings, half have fallen short of the average analyst estimate for net income.

ING Groep NV slid 1.3 percent after the Dutch bank reported a 22 percent decline in profit. Securitas AB tumbled 8.8 percent, the most in a year, after the security company said sales growth was weak. Rio Tinto Group advanced 2.9 percent as the world’s third-biggest mining company reported first-half profit of $5.9 billion, more than the average estimate of $5.04 billion.

Treasury Auction

The yield on the 10-year U.S. Treasury note rose two basis points to 1.65 percent. The notes auctioned today drew a yield of 1.680 percent, compared with a forecast of 1.656 percent in a survey of 10 of the Fed’s primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.49 compared with 3.61 in July and an average of 3.1 for the previous 10 sales.

Treasuries rose earlier amid concern Greece will need more support from European Union leaders after S&P cut the nation’s credit-rating outlook.

The euro depreciated 0.5 percent against the yen, while Japan’s currency strengthened 0.1 percent versus the dollar. The pound rebounded, gaining 0.2 percent against the dollar, after Bank of England Governor Mervyn King said a rate cut might be counterproductive.

German Rates

The yield on the two-year German note declined two basis points to minus 0.052 percent, below zero for the 24th consecutive day. The government sold 3.4 billion euros ($4.2 billion) of 10-year bunds today at an average yield of 1.42 percent, up from 1.31 percent at the previous auction.

The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbed 1.5 basis points to 249 with contracts on Spain rising for the first time in four days.

The S&P GSCI Index added 0.2 percent as 15 of its 24 commodities advanced. Cattle gained for the first time in four sessions, rising 1.2 percent to $1.25675 a pound, as the number of animals available for meatpacking plants is declining amid strong demand for U.S. beef. Hogs climbed 0.9 percent.

Corn rose for the first time this week on signs of increased demand for the grain to produce ethanol to blend with gasoline. Soybeans gained before the government releases production forecasts. Ethanol production in the U.S. rose 1 percent last week to 817,000 barrels a day, Energy Department data showed.

Oil slipped 0.3 percent to $93.35 a barrel after climbing as much as 1.1 percent. The Energy Department said U.S. petroleum demand decreased for the first time in four weeks. The report also showed oil supplies dropped less than in an American Petroleum Institute reported yesterday.

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