Photographer: Daniel Acker/Bloomberg

U.S. Stocks Reach Records While Treasuries Slip; Dollar Rallies

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U.S. stocks climbed to records amid deals and a gain in Apple Inc., while the dollar rose from a four-month low on speculation economic data this week will bolster the case for higher interest rates. Oil declined.

The Standard & Poor’s 500 Index rose 0.3 percent by 4 p.m. in New York, climbing above its April 27 intraday record. Apple added 1.1 percent after billionaire investor Carl Icahn called for a bigger stock buyback. The Bloomberg Dollar Spot Index rallied 0.9 percent, rebounding from its longest stretch of weekly slides since 2013. Yields on 10-year Treasury notes rose nine basis points to 2.24 percent. U.S. oil fell a fourth day.

The S&P 500 closed at a record for a third straight day as the gauge looks to move past an 80-point range it’s been stuck in since February amid concern U.S. growth isn’t robust enough for the economy to withstand higher borrowing costs. Housing reports this week will provide additional clues as to whether the winter slowdown has persisted, and minutes of the Federal Reserve’s April meeting are due Wednesday. Improving indicators could bolster the case for rates to be increased from near zero.

“There’s not pessimism and there’s not giddy optimism,” said Jim Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management Inc., which oversees $347 billion. “We’re somewhere in between. People are starting to focus on if there’s going to be a bounce in economic growth or not.”

Dow Record

The Dow Jones Industrial Average topped its all-time high Monday, adding 0.2 percent to 18,298.88, above a March 2 record. The S&P 500 fell as much as 1.8 percent from its April 24 record through May 6, before rallying 1.1 percent on Thursday to close at a fresh high. Gains Friday gave the gauge its first back-to-back weekly advances since April 10.

Data Monday showed confidence among U.S. homebuilders unexpectedly fell in May, reflecting a cooling off in sales and slower buyer traffic. Mixed economic data on retail sales to the labor market have bolstered speculation the Fed will be in no rush to raise rates.

“We’re slightly above record levels, but we’re still in a tight range,” said Walter Todd, who oversees about $1 billion as chief investment officer for Greenwood, South Carolina-based Greenwood Capital. “The range-bound nature of all financial markets speaks to the fact that people are really struggling to gauge the direction of the economy and what that implies for the Fed and when they’re going to move.”

Apple, Altera

Apple rose to $130.19, its highest level since April 28 after Icahn’s open letter to the company. Apple, which has already announced a $70 billion boost to its capital-return program, is misunderstood in the market and its shares are worth $240, 86 percent above their closing level on Friday, Icahn said.

Among other stocks moving Monday, Ann Inc. jumped 20 percent after Ascena Retail Group Inc. agreed to buy the women’s apparel retailer for about $2.2 billion. Altera Corp. rallied 5.7 percent on a report that it has resumed talks with Intel Corp. about a potential buyout. Endo International Plc slipped 5.4 percent after agreeing to buy Par Pharmaceutical Holdings Inc. in a deal valued at $8.05 billion.

Last week’s 1.2 percent retreat in the Bloomberg dollar index, a gauge of the currency versus 10 major peers, came amid data indicating that while inflation had slackened, the labor market continued to show strength, complicating the Fed’s rate decision. Fed Bank of Chicago President Charles Evans repeated his call for rates to be held near zero until early 2016 at a speech in Stockholm on Monday.

Meaningful Rebound

The dollar strengthened against the euro for the first time in five days, gaining 1.2 percent to $1.1315 per euro. It reached $1.1467 on May 15, the weakest level since Feb. 6.

“This could be the start of a more meaningful rebound in the dollar,” said Adam Myers, the European head of foreign-exchange strategy at Credit Agricole SA’s corporate and investment banking unit in London. “The data is going to improve quite quickly in the second quarter and the Fed will still tighten as planned in the third quarter this year.”

The euro was also weighed down Monday by concern that Greek banks could be pushed toward insolvency if the government fails to reach an agreement with creditors. European Union leaders meet in Riga from May 21.

The Stoxx Europe 600 Index rose 0.4 percent, after falling as much as 0.7 percent, as Greece’s ASE Index erased losses to rally 1.6 percent after a report that the European Commission is proposing a deal compromise.

Commodity Markets

Yields on 10-year German debt rose three basis points, or 0.03 percentage point, to 0.65 percent, while rates on Portugal’s bonds climbed 13 basis points to 2.42 percent. Italy’s jumped 12 basis points to 1.89 percent.

Emerging-market stocks fell 0.2 percent, the first drop in four days as equities in Hong Kong and China retreated.

West Texas Intermediate crude slipped 0.4 percent to $59.43 a barrel in a fourth day of declines. WTI has risen the past nine weeks, its longest run of gains since futures began trading in 1983. Brent crude slid 0.8 percent to end at $66.27.

Copper led a retreat in industrial metals, with futures falling the most in three weeks on concern demand will slow in China and the U.S., the world’s top users. Nickel slid 1.7 percent in London with aluminum.

The Bloomberg Commodity Index dropped 0.2 percent in a second day of declines.

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