The Standard & Poor’s 500 Index climbed, for the biggest monthly rally since February, amid optimism in the strength of the U.S. economy. Metals and oil led commodities higher, while the ruble slid to a record low.
The S&P 500 rose 0.3 percent to a record 2,003.36 at 4 p.m. in New York, bringing its rally for the month to 3.8 percent. The Stoxx Europe 600 Index jumped 0.3 percent, erasing a loss. Ten-year Treasuries dropped 22 basis points this month, the most since January. The euro posted its longest stretch of weekly declines in more than a decade. Russia’s currency extended a monthly drop as the Ukraine conflict intensified. Aluminum reached an 18-month high, and oil added 1.5 percent. The MSCI Emerging Markets Index capped its longest streak of monthly gains since 2005.
Consumer confidence unexpectedly rose in August, offsetting a report showing consumer spending in the U.S. dropped in July for the first time in six months. Inflation in the euro-area slowed this month to the weakest rate since 2009, increasing pressure on the European Central Bank to add stimulus. The ruble and Russia’s equities dropped amid concern the nation may face more sanctions as fighting intensifies in Ukraine.
“We had a great August,” Brian Peery, who helps oversee $5.5 billion for Novato, California-based Hennessy Funds, said in a phone interview. “Everybody has been waiting for a pullback and that really hasn’t happened. From my perspective, there are some great opportunities if you can fade the noise of the geopolitical uncertainties.”
More than $1 trillion was added to the value of global equities in August, sending it to a record $66.2 trillion this week. The S&P 500 has rallied for a fourth week, the longest stretch since November 2013.
The Thomson Reuters/University of Michigan final August index of sentiment rose to 82.5 from 81.8 in July, showing a brightening in Americans’ moods as the labor market gains traction. Another report showed business activity in the Chicago area climbed in August as orders accelerated, a sign that manufacturing will continue to add momentum to the economy. Personal spending in the U.S. fell 0.1 in July, the first drop in six months, according to Commerce Department figures.
The data came after a report yesterday showed that the world’s largest economy expanded more than previously forecast in the second quarter, propelled by the biggest gain in business investment in more than two years.
“The second quarter GDP was so strong we’re at a good launching point for the third quarter,” Paul Zemsky, the New York-based head of multi-asset strategies at Voya Investment Management LLC, which oversees $213 billion, said by phone. “Overall we have a positive view of the economy.”
With the U.S. headed into the Labor Day holiday weekend, the stock market has been experiencing the slowest trading in at least six years. Volume has been below 5 billion shares in each of the past nine days, the longest stretch in data compiled by Bloomberg going back to 2008.
The Stoxx 600 rallied in the final hour to erase an earlier loss. The gauge climbed 1.6 percent this week and 1.8 percent for August as European Central Bank President Mario Draghi signaled policy makers are ready to start a bond-buying program. It dropped in July and June.
A report by the European Union’s statistics office showed that consumer prices in the euro area rose 0.3 percent in August from a year earlier. Unemployment for the region remained at 11.5 percent last month, near a record, Eurostat said in a separate release.
Draghi said last week at the Federal Reserve symposium in Jackson Hole, Wyoming, that policy makers will use “all the available instruments needed to ensure price stability” and are “ready to adjust our policy stance further.”
AstraZeneca Plc climbed 2 percent today as UBS AG said the pharmaceutical firm’s treatment for colorectal cancer has moved to the next stage of testing. Tesco Plc dropped 6.6 percent after the U.K.’s biggest retailer cut its full-year profit forecast and its interim dividend. Peer J Sainsbury Plc lost 4.4 percent, and Wm Morrison Supermarkets Plc slid 5 percent.
The volume of Stoxx 600 shares changing hands today was 4 percent above the 30-day average, according to data compiled by Bloomberg.
The yield on 10-year Treasuries added 1 basis point to 2.35 percent. Ten-year yields dropped 22 basis points this month, the most since January’s decline of 38 basis points.
The euro slid for a seventh-week, the longest stretch since December 1999. The currency fell 0.3 percent to $1.3138 and is down 0.8 percent this week.
Yields on bonds of Spain, Italy, France and Germany all reached record lows this week.
German 10-year bonds advanced for an eighth month, the longest run since January 2005. The yields on the debt were little changed at 0.89 percent after dropping to a record 0.866 percent yesterday. They have fallen 27 basis points this month.
“Draghi has made a speech which opens up the gate for speculation in every monetary-policy dimension,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank, speaking from Frankfurt. “The market is interpreting Draghi as if he’s put every option on the table. That’s a very powerful tool and it will keep a lid on yields.”
The intensifying conflict in Ukraine pushed the ruble down 0.6 percent against the dollar, extending this month’s drop to 3.8 percent. The Micex index of Russian stocks lost 1.6 percent, trimming its August increase to 1.5 percent.
U.S. President Barack Obama said that Russia faces “more costs and consequences” for repeatedly violating the sovereignty and territorial integrity of its former Soviet republic neighbor. While the government in Moscow has denied involvement in the unrest in Ukraine’s east, a group that lobbies for the rights of Russian soldiers said there are signs of a growing number of troops being dispatched to fight there.
There are currently 20,000 Russian troops near the Ukrainian border, with 1,000 operating inside the former Soviet republic, a North Atlantic Treaty Organization military officer estimated yesterday.
Ukraine’s 2017 Eurobond fell for an eighth day, the longest losing streak since March 2013, sending the yield 50 basis points higher to 12.47 percent, a three-month high.
Russia’s equity markets may face a “Lehman moment” if the Ukraine conflict deteriorates further, according to Alexander Kantarovich, head of research for JPMorgan Chase & Co. in Moscow.
“With the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock,” Kantarovich wrote in an e-mailed report today. “Revisiting the post-Lehman lows would imply downside of 50 percent from an index perspective.”
The MSCI All-Country World Index added 0.1 percent today, giving it a 1.9 percent increase for August, the biggest advance since February. The MSCI AC Asia Pacific Index slipped 0.3 percent today, taking its monthly drop to 0.7 percent, the most since January.
Aluminum rose as much as 1.9 percent to $2,119.50 a metric ton on the London Metal Exchange, the highest price since February 2013. It headed for a seventh consecutive monthly advance, the longest stretch since at least 1987, as stockpiles tracked by the bourse reached a two-year low.
Palladium futures jumped 1.1 percent to the highest since 2001 as supply concerns mounted amid prospects for further sanctions against Russia, the world’s biggest producer.
West Texas Intermediate crude oil advanced 1.5 percent in New York to $95.96 a barrel. Prices declined 2.3 percent in August, a second consecutive monthly loss.
The MSCI Emerging Markets Index increased 0.1 percent, leaving it 2.1 percent higher this month. The gauge has climbed for seven consecutive months, the longest streak since 2005.