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S&P 500 Extends Record as Treasuries Fall, Dollar Gains

New York Stock Exchange
Traders work on the floor of the New York Stock Exchange (NYSE) in New York. Photographer: Jin Lee/Bloomberg

U.S. benchmark stock indexes extended record highs while European shares rose for a fifth day, Treasuries fell and the dollar strengthened after data on American durable goods and new homes beat forecasts. Turkish shares and the lira rose as BlackRock Inc. said it was buying.

The Standard & Poor’s 500 Index was up 0.3 percent to 1,833.32 at 1 p.m. in New York on lower-than-average volume before the Christmas holiday. The Stoxx Europe 600 Index rose 0.3 percent to extend the longest winning streak in two months. The dollar advanced against 12 of 16 major peers and 10-year Treasury rates rose five basis points to 2.98 percent, the highest since September. Energy and metals led commodity gains.

A 3.5 percent jump in orders for durable goods and better-than-estimated sales of new homes underscored the economic confidence expressed by the Federal Reserve this month when it said it will begin reducing monetary stimulus. The People’s Bank of China conducted the first reverse repurchase agreements in three weeks after financing costs surged. About 2.6 billion shares changed hands in the U.S., the fewest since last Christmas Eve.

“The data confirms the call the Fed made, that the economic recovery is broad-based and very likely to continue and even strengthen,” Brad McMillan, chief investment officer for Waltham, Massachusetts-based Commonwealth Financial Network, said in a phone interview. His firm has more than $71 billion under management. “It bolsters the case for people who think stocks can continue to appreciate.”

S&P 500 Record

The S&P 500 closed at an all-time high for a third straight day. The gauge rallied almost 29 percent this year, heading for its biggest annual jump since 1997. Commodity, telephone and energy shares led gains in nine of the 10 main industry groups in the index today. Microsoft Corp., DuPont Co. and Caterpillar Inc. climbed at least 1 percent for the biggest gains in the Dow Jones Industrial Average, which also closed at a record.

Tesla Motors Inc. advanced 5.5 percent after saying the National Highway Traffic Safety Administration reaffirmed the safety rating for the carmaker’s Model S sedan. Standard Pacific Corp., Meritage Homes Corp. and D.R. Horton Inc. paced an advance in homebuilders.

Economic Data

Bookings for goods meant to last at least three years rose 3.5 percent after a 0.7 percent drop the prior month, a Commerce Department report showed. The median estimate of 75 economists surveyed by Bloomberg called for a 2 percent advance. Excluding demand for transportation equipment, which is often volatile, orders also beat projections.

Purchases of new U.S. homes also exceeded projections in November, holding near a five-year high and showing the housing recovery was gaining momentum even as mortgage rates climbed. Sales fell 2.1 percent to a 464,000 annualized pace, following a revised 474,000 rate in October that was the strongest since July 2008, Commerce Department figures showed. The median forecast of 75 economists called for 440,000.

The Stoxx 600 traded at the highest level of the month after jumping 3.9 percent in the previous four days for the biggest rally since April. The index has advanced 16 percent this year.

A gauge of Stoxx 600 media companies climbed the most among 19 industry groups, gaining 1 percent. British Sky Broadcasting Group Plc increased 2.5 percent. Royal Boskalis Westminster NV, a Dutch dredging company, rose 2.7 percent after winning a $275 million contract in Australia.

The London Stock Exchange, NYSE Euronext’s European cash markets and Madrid’s bourse closed early today. No trading took place in Germany, Switzerland, Italy or the Nordic countries. In the U.S., stock trading will end at 1 p.m. New York time. U.S. Treasury trading closed at 2 p.m. New York time and most global markets will remain shut tomorrow for the Christmas holiday.

Dollar Strengthens

The dollar strengthened 0.1 percent to 104.26 yen after reaching 104.64 yen on Dec. 20, the highest level since October 2008. The U.S. currency added 0.1 percent to $1.3678 per euro.

The yen tumbled 15 percent this year, the most among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 4.1 percent, while the euro was the best performer, jumping 8.4 percent.

U.K. two-year yields climbed amid speculation an improving economy will prompt the Bank of England to increase interest rates earlier than it forecasts. The rate increased two basis points to 0.58 percent, the highest since June 24.

U.K. government bonds lost 4.2 percent this year through yesterday, according to Bloomberg World Bond Indexes. German securities fell 1.9 percent and U.S. Treasuries declined 3 percent.

Financial Markets

Treasuries reached the cheapest level relative to stocks in 3 1/2 years yesterday. The difference between the earnings yield on the S&P 500 and the 10-year Treasury yield narrowed to 3.10 percentage points, the least since May 2010, compared with a three-year average of 5.09 points.

The PBOC auctioned 29 billion yuan ($4.8 billion) of seven-day reverse repos, according to two traders at primary dealers required to bid at the auctions. The last such cash injection was on Dec. 3, when the monetary authority added 18 billion yuan.

The MSCI Emerging Market Index of shares climbed 0.3 percent to an almost two-week high on a closing basis. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong jumped 1.8 percent, the most in a month.

The Borsa Istanbul 100 Index jumped 1.3 percent, trimming this month’s loss to less than 9 percent. The lira strengthened almost 1 percent, its first advance in six days.

Turkey Bulls

BlackRock Inc., the world’s biggest money manager, said yesterday it has added to positions in Turkey, especially financial stocks, as valuations became more compelling following a politically driven selloff.

“We have been adding to positions in Turkey, especially in the financial sector, over the last few days, as valuations are now compelling,” Sam Vecht, head of the emerging markets specialist team at BlackRock in London, said in e-mailed comments to Bloomberg. “Historically, in emerging markets it has paid off to be brave when others are fearful.”

Gasoline, zinc, heating oil and lead rose at least 0.7 percent to lead gains in 14 of the 24 commodities in the S&P GSCI Index. Crude oil was up 37 cents at $99.28 a barrel in New York.

Copper advanced 0.6 percent to $7,283 a metric ton. Prices are set to fall about 8 percent this year, after gaining 4.4 percent last year. China is the biggest user of the metal.

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