U.S. Stocks Climb a Fifth Day as Crude Drives Commodities Rally

China Sets Modest Growth Target
  • Brent oil tops $40 as American drillers reduce rig levels
  • Treasuries fall, while German bunds climb on ECB outlook

U.S. stocks erased losses, eking out their longest run of daily gains in five months amid speculation Chinese stimulus efforts will boost demand for natural resources, helping push Brent crude oil above $40 a barrel for the first time since December.

The Standard & Poor’s 500 Index rose for a fifth straight day, extending gains at its highest level since the start of the year. Energy stocks climbed as oil rallied on speculation producers may freeze output at current levels, while Netflix Inc. slipped on a report its subscriber growth slowed. Iron ore posted its biggest one-day gain on record. Treasuries declined, pushing two-year yields to the highest level since January, while German bunds climbed on expectations for European Central Bank stimulus measures this week.

Global equities have rallied over the past three weeks as investors gauge the prospect for additional central-bank stimulus following a tumultuous start to the year in trading. ECB chief Mario Draghi is widely speculated to deliver a package of monetary easing measures to revive euro-area growth and inflation. Commodities are climbing after China’s leaders lowered their target for economic expansion in 2016, adding that they’re planning a record-high budget deficit to stoke growth in the world’s second-largest economy. 

“The big story again is commodities with oil just continuing to move up,” Thomas Garcia, head of equity trading at Thornburg Investment Management Inc. in Santa Fe, New Mexico, said by phone. “It seems like that’s leading stocks. You’re definitely going to get some short-covering by people who were short and panicking at this point.”

Equities

The S&P 500 added 0.1 percent to 2,001.76 as of 4 p.m. in New York. The index had topped its average price for the past 50 and 100 days during a four-day rising streak that is its longest since October. The S&P 500 has jumped 9.4 percent from a Feb. 11 low, though it remains down 2.6 percent for the year.

The Dow Jones Industrial Average advanced 0.4 percent as energy producers rallied, while a slump in technology and biotech shares dragged the Nasdaq 100 Index down by 0.6 percent. Exxon Mobil Corp. increased 2.6 percent to a four-month high. Monsanto Co. and DuPont Co. added at least 2.4 percent as the raw-materials group erased 2016 losses. Microsoft Corp. and Apple Inc. slipped at least 1.1 percent, while Netflix fell 6 percent.

The Stoxx Europe 600 Index declined 0.3 percent after its longest run of weekly rallies since October. BASF SE slid after people familiar with the matter said it is considering a counter bid for DuPont Co., which has agreed to merge with Dow Chemical Co. 

Italian lenders once again led declines, with Banca Monte dei Paschi di Siena SpA and Banco Popolare SC falling at least 4.7 percent. Concern over bad loans sent them to their lowest prices since at least 2012 last month.

The MSCI Asia Pacific Index was little changed as Japanese shares retreated, while those in Australia jumped.

Commodities

The Bloomberg Commodity Index capped a sixth day of gains, rising 1.2 percent.

Brent crude climbed 5.5 percent to $40.84 a barrel, while West Texas Intermediate oil rose 5.5 percent to $37.90. Speculators reduced their short positions on oil by the most in 10 months in the week ended March 1, Commodity Futures Trading Commission data showed.

Iron ore soared the most ever as Chinese support measures boosted the outlook for steel and spurred speculation that some investors who’d bet against the market had been caught out. Ore with 62 percent content delivered to Qingdao jumped 19 percent to $63.74 a dry metric ton, data on Metal Bulletin Ltd.’s website show.

Copper sank for the first time in a week, losing 0.6 percent in London, while gold rallied, climbing 0.6 percent in its fourth increase in six days.

Currencies

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell for a sixth consecutive session, slipping 0.2 percent to its lowest level since November.

The euro was little changed versus the dollar as investors braced for the ECB’s policy decision. Nearly three-quarters of the economists in a Bloomberg survey predict the central bank will expand quantitative easing at their meeting this week, and all but one see the deposit rate being cut further below zero. The shared currency weakened 0.2 percent to 124.90 yen.

A gauge of twenty emerging currencies advanced for a sixth day. Colombia’s peso and Russia’s ruble led gains, climbing at least 0.7 percent versus the dollar.

Bonds

Two-year Treasury yields climbed four basis points, or 0.04 percentage point, to 0.91 percent, the highest level since Jan. 13. The extra yield benchmark 10-year Treasuries offer over comparable-maturity German debt widened to the most since January as data indicate a strengthening U.S. economy in contrast with tepid growth abroad.

Germany’s 10-year yields slid two basis points to 0.22 percent, while France’s dropped three basis points to 0.63 percent.

“Poor risk appetite coupled with the expectation that the ECB will deliver this time is driving bonds up,” said Arne Lohmann Rasmussen, head of fixed-income research at Danske Bank A/S in Copenhagen.

Emerging Markets

MSCI’s Emerging Market Index rose for a seventh day, its longest rising stretch since April. Benchmark equity gauges in Russia and Dubai added at least 1 percent amid the oil rally and as Julius Baer Group Ltd. upgraded developing-nation stocks from underweight to neutral.

Brazil’s real retreated as economists said the country’s recession will be deeper than previously expected, throwing cold water on a four-day rally that sent the currency to a three-month high last week. The real declined 0.9 percent to 3.7852 per dollar.

China’s foreign-exchange reserves fell at a slower pace last month as the nation’s financial markets stabilized and policy makers took more steps toward shoring up growth. The world’s largest currency hoard dropped by $28.6 billion to $3.2 trillion in February, the People’s Bank of China said in a statement Monday.

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