U.S. stocks rose to fresh highs, with the Nasdaq Composite Index breaching 5,000 for the first time in 15 years, while Treasuries fell as rising consumer purchases signaled strength in the biggest part of the American economy. The dollar advanced and Brent crude oil slumped.
The Nasdaq Composite added 0.9 percent to 5,008.10 by 4 p.m. in New York, as both the Standard & Poor’s 500 Index and the Dow Jones Industrial Average rallied to records. The Stoxx Europe 600 Index retreated 0.2 percent. Yields on 10-year Treasuries rose nine basis points to 2.09 percent. The Bloomberg Dollar Spot Index gained 0.4 percent, while the yuan slipped to a two-year low after China cut interest rates. Brent slid 4.9 percent from its highest level in 2015 on concern over the global oil surplus, while U.S. crude dropped 0.3 percent.
Consumer purchases in the U.S. rose 0.3 percent in January, adjusted for inflation, adding to signs the recovery is on a strong footing as the Federal Reserve assesses inflation and jobs data to gauge the timeline for raising interest rates. Euro-area consumer prices fell less than predicted last month, offering some relief to the region’s central bank as it prepares to put its stimulatory bond-buying program into action.
“With February as strong as it was, to see some follow-through here is encouraging,” Walter Todd, chief investment officer for Greenwood, South Carolina-based Greenwood Capital, said by phone. “We got some decent data this morning and with numbers out of Europe better than expected and the Chinese central bank cutting rates over the weekend, it’s a combination of those things that have us moving higher.”
Global equities from Europe to Asia rallied last month to multiyear highs, while the best month since 2012 for the Nasdaq Composite left the technology-stock barometer within striking distance of its dot-com era record. The gauge now stands less than 1 percent below its bubble peak. At its current pace, the Nasdaq Composite is poised to rise for nine straight quarters, a feat it’s never accomplished.
Momentum is building in stocks that have the fastest profit growth, with companies from Apple Inc. to Intel Corp. spending more money than anybody else to buy back shares. While the advance has brought the Nasdaq Composite close to new highs, valuations are only a fraction of where they were 15 years ago, data compile by Bloomberg shows.
Unlike the dot-com era, when investors snapped up Internet companies on expectations rather than profit, today’s gains are built on earnings driven by demand for products such as Apple’s iPhone and Google Inc.’s web-search services.
“Probably most people didn’t think it would hit 5,000 again in their lifetime,” Jason Cooper, a money manager who helps oversee $2.5 billion in South Bend, Indiana, at 1st Source Investment Advisors, said in a phone interview. “The fact that the companies have positive earnings may be why this time could be more constructive.”
Among U.S. stocks moving Monday, Cisco Systems Inc. and Intel jumped at least 2.3 percent. Visa Inc. rose 2.6 percent after the company struck a deal with Costco Wholesale Corp. to replace American Express Co. as the exclusive issuer for Costco credit cards in the U.S. and Puerto Rico.
Lumber Liquidators Holdings Inc. plunged 25 percent after a television report claimed the company sold flooring that didn’t meet California health and safety standards. Trading in the stock was delayed at the U.S. open.
Data Monday showed manufacturing expanded in February at the slowest pace in a year as weaker growth abroad limited orders for U.S.-made products.
The 0.3 percent increase in purchases followed a 0.1 percent drop the prior month, a Commerce Department report showed. So-called nominal spending, which doesn’t take into account changes in price, declined 0.2 percent, more than estimated, while incomes grew 0.3 percent for a second month.
The dollar rallied as the consumer data bolstered speculation the Fed will raise borrowing costs before year-end amid a wave of monetary easing by other central banks.
The greenback strengthened a third day versus the yen, adding 0.5 percent to 120.19 per dollar, and was little changed at $1.1182 per euro.
In Europe, bonds of the region’s higher-yielding nations extended gains from last week. Portugal’s 10-year yield declined for a 14th successive day, the longest run on record, to an all-time low of 1.74 percent. Italy’s 10-year yields dropped to a record 1.294 percent.
The European Central Bank may start buying sovereign debt on March 9 as part of its quantitative-easing program, Il Sole 24 Ore reported on Sunday.
“QE is obviously very much the focus currently,” said Daniel Lenz, lead market strategist at DZ Bank AG in Frankfurt. “Especially in the periphery -- Spain, Italy and Portugal -- there seems to be some confidence that QE will bring spread levels down.”
The Stoxx 600 declined from its highest level in more than seven years as a gauge of oil and gas companies dropped 1.5 percent, the first loss in five days. Royal Dutch Shell Plc and Total SA slid at least 1.3 percent.
The broader index has rallied 14 percent in 2015, its best-ever start to a year, as Greece forged a loan agreement and the ECB announced its QE plans.
The Shanghai Composite Index climbed 0.8 percent to a five-week high and the Hang Seng China Enterprises Index increased 0.2 percent. A private measure of factory activity in Asia’s largest economy showed a faster-than-estimated expansion Monday as lawmakers prepared to meet for the National People’s Congress in Beijing.
Emerging-market currencies fell for a third day after a Chinese interest-rate cut pushed the yuan to a 2012 low and the ruble and Brazilian real led declines in developing Europe and Latin America.
A gauge tracking 20 emerging-market currencies decreased 0.4 percent. The move to join global counterparts with more easing reflects the People’s Bank of China’s concern over an economy pressured by a property slump.
Brent dropped to $59.54 a barrel and West Texas Intermediate oil slipped to $49.59.
Prices need to fall further before production is sufficiently curbed to balance the market, Goldman Sachs Group Inc. analysts said. WTI gained earlier in the session after Genscape Inc. was said to report a smaller inventory increase at Cushing, Oklahoma, according to analysts including Phil Flynn at the Price Futures Group in Chicago.
Copper prices rose to a six-week high as China’s interest-rate cut bolstered demand prospects in the country, the world’s biggest user of industrial metal. Copper for delivery in three months rose 0.2 percent to $2.696 a pound in New York. Earlier, the price reached its highest level since Jan. 13 on the London Metal Exchange.
Gold futures fell from the highest level in almost two weeks as gains in equities cut demand for haven assets. Futures for April delivery dropped 0.4 percent to $1,208.20 an ounce in New York. Earlier, the metal reached $1,223, the highest for a most-active contract since Feb. 17.