U.S. Stocks Climb Toward Records Amid Earnings; Treasuries Drop

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Fed Is the Only Game in Town: Abby Joseph Cohen

U.S. stocks rose, sending benchmark indexes to within striking distance of records, amid results from Coca-Cola Co. to McDonald’s Corp. Energy shares gained as Brent crude oil rose, while Treasuries slid on speculation interest rates will be raised this year.

The Standard & Poor’s 500 Index climbed 0.5 percent by 4 p.m. in New York, 0.4 percent below its March record. Visa Inc. surged the most since October after China indicated the company could enter the market. The Nasdaq Composite Index added 0.4 percent to its highest level in 15 years. Japan’s Nikkei 225 Index closed above 20,000 for the first time since 2000. Ten-year Treasury yields rose seven basis points to 1.98 percent. Brent oil climbed for the first time in four days.

While indexes from Asia to Europe are trading at or near multi year highs, the S&P 500 last reached its record on March

2. With investors assessing the strength of corporate America amid Federal Reserve plans to tighten monetary policy, about 78 percent of S&P 500 members have report profit that beat analyst projections. Data showing a bigger-than-forecast increase in existing home sales fueled speculation over Fed rate moves.

“Earnings are coming in better than expected so far, so the dire consequences that were predicted aren’t quite there,” Mark Kepner, an equity trader at Themis Trading LLC, in Chatham, New Jersey, said by phone. “We keep getting up to these levels in the market and it seems like we can’t penetrate higher, it tends to fall back a little bit. It’s going to take something pretty good to get us over this hump and earnings may be what we need.”

EBay, Facebook

EBay Inc. climbed 5 percent in post-market trading after providing a profit outlook for the second quarter that topped estimates. Facebook Inc. fell about 3 percent in extended trade as their sales missed analysts’ projections as the stronger dollar hurt advertising revenue.

The S&P 500 ended Wednesday 10 points away from its record, while the Nasdaq Composite Index sits 11 points below of its dot-com-era high.

Coca-Cola jumped 1.3 percent after posting its first quarterly sales advance in two years. McDonald’s added 3.1 percent as Chief Executive Officer Steve Easterbrook promised to give details of his turnaround plan next month, following another quarter of declining sales and profit.

Chipotle Mexican Grill Inc. dropped 7.4 percent after reporting sales that trailed estimates and saying a shortage of pork is expected to last until the end of the year. Boeing Co. lost 1.4 percent after posting revenue that missed forecasts and as production costs kept rising for the 787 Dreamliner.

Housing Data

Sales of previously owned homes in the U.S. climbed in March to the highest level since September 2013, data Wednesday showed, as jobs growth and cheap borrowing costs helped sustain the progress in residential real estate. An index of S&P homebuilders sank 2.6 percent after D.R. Horton Inc. reported results. Horton tumbled 5.4 percent for the third-biggest loss in the S&P 500.

Yields on U.S. government debt have climbed as the economy has shown signs of shaking off weak first-quarter economic data attributed in part to a brutal winter across the U.S.

“It could be a bit of a signal that we’re getting a little bit of a rebound effect in here,” said David Ader, head of U.S. government-bond strategy at CRT Capital Group LLC in Stanford, Connecticut. “That would be negative for the Treasury market.”

European Markets

The Stoxx Europe 600 Index retreated as retailers dropped the most among 19 industry groups on Wednesday. Greece’s benchmark ASE Index climbed 2.1 percent, the most among western-European markets, with banks capping the biggest gains in a month.

Yields on 10-year Greek notes fell 79 basis points, or 0.79 percentage point, to 12.85 percent. Rates on Spanish notes dropped eight basis points to 1.37 percent and Italian yields decreased six basis points to 1.39 percent.

The European Central Bank’s Governing Council raised the Emergency Liquidity Assistance ceiling for Greek lenders by 1.5 billion euros ($1.6 billion) to 75.5 billion euros in a conference call on Wednesday, according to two people familiar with the matter. Greece and its creditors are narrowing their differences, Finance Minister Yanis Varoufakis said on Tuesday.

Switzerland’s franc dropped the most in more than two months against the euro after the nation’s central bank said it reduced the group of sight-deposit account holders that are exempt from negative interest rates.

Hong Kong

The MSCI Emerging Markets Index rose for a second day, adding 0.5 percent. The Hang Seng China Enterprises Index of Chinese shares traded in Hong Kong climbed 0.8 percent and the Shanghai Composite Index advanced 2.4 percent to 4,393.81.

The Shanghai gauge has jumped 89 percent in the past six months, the most among benchmark indexes globally, as the government lowered borrowing costs to boost growth. The People’s Daily said in a commentary in its online edition that the bull market is just getting started at the 4,000 point level.

West Texas Intermediate crude ended Wednesday down 0.8 percent to $56.16 a barrel, after a government report showed U.S. oil inventories rose more than expected last week. Brent rose 1 percent to $62.73 as a Saudi Arabia-led coalition renewed air raids on Shiite rebels in Yemen, reigniting concerns over supply disruptions in the region.

Gold futures slipped 1.3 percent to $1,186.90 an ounce in New York, the biggest drop for the most-active contract since March 6. The Bloomberg Commodity Index fell a fourth day, declining 0.1 percent.

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