May Selling on Hold With U.S. Stocks at Record After Weekly Gain

Equities traders aren’t quite ready to sell in May.

The Standard & Poor’s 500 Index climbed to a record as U.S. stocks eked out a weekly gain after a weaker dollar boosted shares of multinational companies and a selloff in global bond markets eased.

Halfway through a month that has been the second-worst historically, the S&P 500 has advanced 1.8 percent. Equities rose for a second week after selling that erased $400 billion from fixed-income markets subsided. The dollar’s fifth weekly retreat boosted shares of the biggest American companies on speculation its drop makes their products more competitive, while mixed economic data added to speculation the Federal Reserve will hold interest rates near zero.

The Standard & Poor’s 500 Index rose 0.3 percent to 2,122.73 in the five days, surpassing its April 24 record. The Dow Jones Industrial Average added 81.45 points, or 0.5 percent, to 18,272.56. The Bloomberg Dollar Spot Index dropped 1.2 percent to extend the longest weekly slide since October 2013.

“Stocks turned around despite a selloff in the bond market and people took that as a positive sign,” W. Janet Dougherty, a global investment specialist at JP Morgan Private Bank in Chicago, said by phone. “You’ve got a very healthy consumer out there with jobs improving, and low inflation is definitely helpful. A selloff in the bond market might be indicative of what could happen when the Fed raises rates, so if the equity markets can withstand that, it’s a pretty optimistic picture.”

Back-to-Back

The S&P 500 jumped 1.1 percent Thursday, halting a three-day slide, after data showed an unexpected decline in producer prices last month. At the same time, the fewest claims for jobless benefits in 15 years signaled the labor market continues to strengthen, complicating the Fed’s rate decision.

The back-to-back weekly advance halts a string of five up-and-down periods for equities. The S&P 500 fell as much as 1.8 percent from its record through May 6, amid concern the Fed would raise borrowing costs even as data indicated the recovery could be faltering. It has rallied 2.1 percent since.

The index has fallen 0.1 percent on average in May in data going back to 1928, the second-worst monthly performance after September.

“All of the fears about the Fed coming sooner subsided,” said Paul Zemsky, the head of multi-asset strategies at Voya Investment Management LLC, which oversees $218 billion. “Investors are taking a little bit of a sigh of a relief that inflation isn’t as high as we thought. We also may be seeing the unwind on the Europe trade. There was a huge amount of money going into Europe and now it’s coming back into the U.S.”

Deal Activity

More than $400 billion has been wiped off the value of global bonds this month, led by a rout in German bunds after yields had tumbled to historic lows. The dollar had climbed nine straight months through March on speculation the first rate hike in almost a decade was looming.

U.S. stocks also got a boost in the week from merger activity, with about $52 billion in deals announced as Verizon Communications Inc. agreed to buy AOL Inc. for $4.4 billion and Owens-Illinois Inc. entered a pact to buy the food-and-beverage glass business of Vitro SAB for $2.15 billion. AOL jumped 17 percent, while Owens-Illinois added 5.5 percent.

In one of the biggest transactions of the week, Williams Cos. agreed to buy the 40 percent of Williams Partners LP it doesn’t already own for $13.8 billion. Williams surged 5.6 percent.

Pall Corp. jumped 24 percent in the week for the biggest gain in the S&P 500 after Danaher Corp. announced a $13.8 billion acquisition of the maker of filtration technologies.

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