Treasuries Tumble as Dollar Gains With Crude; Stocks Edge Higher

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  • S&P 500 pares advance in final hour of trading amid earnings
  • Oil surges past $42.50 a barrel, aluminum leads metals higher

U.S. stocks pared an advance that took the Standard & Poor’s 500 Index to a five-month high, while Treasuries tumbled and the dollar rose the most in a week versus the euro. Crude rallied to the highest since November as American production dropped.

The S&P 500 almost erased all of a 0.5 percent advance in the final hour of trading, holding above 2,100 to close at a four-month high. Crude staged a rally of more than 5 percent from its intraday lows to close at the highest level since November. The yield on 10-year Treasury notes jumped by the most in almost two months as inflation bets climbed. Argentina’s bonds rallied, signaling strong demand. The dollar rose from a nine-month low. Yen-denominated contracts on the Nikkei 225 Stock Average added 1.2 percent on the Chicago Mercantile Exchange at 5:07 p.m. New York time.

Stocks struggled to add to gains that have pulled them up more than 15 percent from this year’s low amid signs of stabilization in China’s economy and a rally in crude that took back above $40 a barrel. A pullback Wednesday in Shanghai shares rekindled, at least briefly, concern that China’s growth may continue to slow, while crude’s retreat and subsequent rebound reminded investors of oil’s sway on financial markets. Corporate earnings have so far failed to set any definitive tone, as bank results surprised while technology companies have disappointed.

“There’s been no bearish catalyst that’s surfaced to really knock things down and earnings are spilling in and going as expected,” said Nick Kalivas, senior equity product strategist at Invesco PowerShares in Downers Grove, Illinois, which has about $100 billion in its funds. “We’re now a couple of heartbeats off the all-time high and that’s creating performance anxiety among fund managers, causing people to think the picture’s not as glum. It’s keeping an underlying bid in the market.’

Stocks

The S&P 500 climbed to 2,102.40, retreating in the final hour of trading after touching the highest level since July 22. The MSCI All-Country Index of shares rose 0.1 percent to the highest since Dec. 1. The Stoxx Europe 600 Index rose 0.4 percent after erasing a drop of as much as 0.5 percent.

Intel Corp. rose 1.3 percent as the company announced jobs cuts after its first-quarter revenue and forecast for the next three months missed analysts’ estimates. Coca-Cola Co. dropped the most since October 2014 after earnings disappointed.

Recent gains in the Stoxx Europe 600 pushed it out of a holding range it was stuck in for a month. Still, the equity gauge has tumbled 15 percent since reaching a record a year ago.

Canadian stocks rose a third day, trading at a five-month high, while benchmark share gauges fell across Asia’s developing economies and the MSCI Emerging Markets Index retreated from a five-month high.

Currencies

The dollar logged its biggest gain in a week versus the euro as oil surged. The greenback strengthened 0.5 percent to $1.13 per euro.

The yen fell a third day after fluctuating earlier versus the dollar after Bank of Japan Governor Haruhiko Kuroda said monetary easing is not a promise of a weaker currency or stronger equities. The Bloomberg Dollar Spot Index climbed 0.4 percent after falling Tuesday to the lowest since June.

Brazil’s real swung between gains and losses as speculation that a strong economic team could be named if president Dilma Rousseff is impeached offset the central bank’s efforts to weaken the currency.

Commodities

Oil climbed to the highest level in more than four months after a government report showed U.S. crude production dropped. West Texas Intermediate oil rose 3.8 percent to settle at $42.63 a barrel in New York. Brent for June climbed 4 percent to end at $45.80 a barrel.

Crude output fell to 8.95 million barrels a day in the week ended April 15, the lowest since October 2014, Energy Information Administration data show. OPEC members and other producers plan to meet in Russia, possibly in May, in a push to freeze output and support oil prices, Iraq’s Deputy Oil Minister Fayyad Al-Nima said.

Aluminum for delivery in three months gained 2.2 percent to settle at $1,622 a metric ton in London, the biggest increase since Dec. 4 and the highest since September. Copper futures for July delivery added 0.6 percent to $2.2455 a pound in New York. Copper, zinc, nickel, lead and tin also gained in London.

Silver futures advanced to the highest since May, a day after entering a bull market, as demand for exchange-traded funds backed by the metal approached a record.

Bonds

Treasuries fell, with the yield on 10-year securities jumping six basis points, or 0.06 percentage point, to 1.85 percent. Inflows into inflation-indexed exchange-traded bond funds this year have already exceeded flows for all of 2015, suggesting investors are growing more bullish that inflation will climb toward the Federal Reserve’s 2 percent target.

Argentina’s blockbuster $16.5 billion bond sale is opening up the floodgates for junk-rated issuers in developing countries. The Latin American country’s return to global capital markets for the first time since its 2001 default brought high-yield issuance from emerging markets to $18 billion this week. That’s more than the previous 11 weeks combined.

Puerto Rico’s Government Development Bank, operating under a state of emergency imposed to halt an erosion of its dwindling cash, has filed with regulators to sell debt as officials negotiate with creditors about a $422 million payment owed at the start of May.

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