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U.S. Stocks Rise, Treasuries Drop on Economy Confidence

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Gold
Gold rose 1.4 percent to $1,317.70 an ounce in New York, headed for a 4.3 percent gain this week. Photographer: Brent Lewin/Bloomberg

Feb. 14 (Bloomberg) -- U.S. stocks rose, with the Standard & Poor’s 500 Index approaching a record, while Treasuries retreated amid continued confidence in the strength of the world’s largest economy. Emerging-market equities capped the biggest weekly gain in five months, and gold and silver rallied.

The S&P 500 Index climbed 0.5 percent at 4 p.m. in New York, putting the gauge within 10 points of its all-time high. The yield on 10-year Treasuries rose one basis point to 2.74 percent. The MSCI Emerging Markets Index added 1.3 percent as the Turkish and Brazilian benchmark indexes advanced. The Bloomberg Dollar Spot Index fell to the lowest this year. Argentine bonds rallied after the government started a new inflation index. Gold held above $1,300 an ounce and silver had the longest rally since March 2008.

Consumer confidence in the U.S. was stronger than projected in February as Americans grew more upbeat about the economy. Factory output unexpectedly declined in January by the most since May 2009, adding to evidence severe winter weather weighed on growth. The euro-area’s gross domestic product expanded 0.3 percent in the fourth quarter, up from 0.1 percent in the previous three months.

“I think the market is still believing that the economy is moving in the right direction,” Robert Pavlik, chief market strategist at Banyan Partners LLC, which manages $4.5 billion, said in a phone interview. “Most of the reports are being negatively affected by the weather. Folks are looking to buy on the dips.”

Stocks Rebound

The S&P 500 rallied 2.3 percent this week, its best of the year. It advanced six of the past seven days and is up 5.6 percent from a three-month low on Feb. 3 on speculation economic growth is strong enough to withstand further cuts to monetary stimulus. The index had fallen as much as 5.8 percent from a record 1,848.38 on Jan. 15 on signs of slowing growth in China and a rout in emerging-market currencies.

Fed Chair Janet Yellen said this week U.S. growth has strengthened and that only a “notable change in the outlook” for the economy would prompt policy makers to slow the pace cuts to the monthly bond-buying program.

The Thomson Reuters/University of Michigan preliminary index of U.S. consumer sentiment was unchanged in February from a month earlier at 81.2. The median estimate in a Bloomberg survey of 74 economists called for a decline to 80.2. Forecasts ranged from 76.5 to 86.

The 0.8 percent decrease at manufacturers followed a revised 0.3 percent gain the prior month that was weaker than initially reported, figures from the Fed showed. The median forecast in a Bloomberg survey of economists called for a 0.1 percent advance.

‘Rebound Coming’

“There is an expectation that weather is involved in the economic weakness and that a rebound is coming in March, April,” John Augustine, chief market strategist at Cincinnati-based Fifth Third Bancorp, said in a phone interview. His firm oversees $27 billion.

U.S. equities have also climbed this week amid better-than-forecast corporate earnings. Seventy-five percent of the 400 companies that have posted results this season beat analysts’ estimates for profit and 64 percent exceeded sales projections, data compiled by Bloomberg show.

Among stocks moving today, Cliffs Natural Resources Inc. jumped 5.8 percent after the iron miner reported earnings that topped estimates. Campbell Soup Co. advanced 5 percent as second-quarter profit exceeded forecasts and the company reiterated its target for full-year adjusted income. Occidental Petroleum Corp. gained 3.8 percent after saying it will split its operations in California as one of the final steps of a breakup plan.

Agilent Drops

Agilent Technologies Inc. fell 8 percent for the biggest decline in the S&P 500. The company lowered its full-year forecast for adjusted earnings to between $2.96 and $3.16, from its earlier projection for $3.03 to $3.33.

The MSCI Emerging Markets Index’s gain today pushed the week’s rally gain to 2.2 percent, the most since the period ended Sept. 20. The Borsa Istanbul 100 Index jumped 1.8 percent as Turkiye Garanti Bankasi AS led a rally in lenders, while homebuilders drove gains in Brazil’s Ibovespa.

“Emerging markets are leveraged to the economies Europe and the U.S., and good economic data from these regions is certainly a favorable development,” Timothy Ghriskey, chief investment officer at New York-based Solaris Group LLC, which manages about $1.5 billion in assets, said by phone. “We see

The Shanghai Composite Index added 0.8 percent and is 3.5 percent higher this week. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 0.6 percent.

Currency Moves

China’s consumer price index rose 2.5 percent from a year earlier, the National Bureau of Statistics said today, the same pace as in December.

Australia’s dollar rallied following a two-day decline after the price data from China, the nation’s biggest trading partner. It rose 0.6 percent to 90.36 U.S. cents.

Hungary’s forint strengthened 0.7 percent against the euro, after the economy grew the most in seven years in the fourth quarter. The benchmark BUX index of stocks added 1.2 percent.

The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major peers, fell 0.3 percent to 1,017.57, the lowest level since Dec. 17. The pound reached an almost three-year high versus the greenback on better-than-forecast construction output. The euro strengthened 0.1 percent to $1.3699 and the yen gained 0.4 percent to 101.80.

Gold rose 1.4 percent to settle at $1,318.60 an ounce in New York. The metal rose 4.2 percent this week, the most since Aug. 16. Silver climbed 5 percent for a 10th straight gain.

West Texas Intermediate oil declined 5 cents to settle at $100.30 a barrel, holding above $100 for a fourth time this week.

European Stocks

The Stoxx Europe 600 Index climbed 0.6 percent to cap its best week of the year, as two shares advanced for every one that declined. ThyssenKrupp AG climbed 3.8 percent after Germany’s largest steelmaker reported first-quarter profit that beat analyst estimates. Banco Popolare SC gained 4 percent after Bank of America Corp. increased its price estimate for Italy’s fourth-biggest bank.

‘‘This is the third consecutive quarter of positive growth in the euro zone, but comes with the additional charm of much broader-based growth spreading beyond the core countries,” Evelyn Herrmann, an economist at BNP Paribas SA in London, said in a note.

Italy’s 10-year yield slipped two basis points to 3.69 percent, after dropping to 3.66 percent on Feb. 12, the lowest since February 2006. The rate on similar-maturity Spanish securities slid as much as five basis points to 3.57 percent, the lowest since March 2006.

To contact the reporters on this story: Callie Bost in New York at cbost2@bloomberg.net; Jeremy Herron in New York at jherron8@bloomberg.net

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net

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