Stocks Rally, Oil Reaches Highest Since 2008 on Jobs Growth
Stocks rallied, adding to gains from the biggest first-quarter advance for U.S. indexes since 1998, after American employers added more jobs than forecast and manufacturing industries grew. Oil surged to the highest price since September 2008 and Treasuries climbed.
The Standard & Poor’s 500 Index increased 0.5 percent to 1,332.41 at 4 p.m. in New York, paring an earlier rally of as much as 0.9 percent. The MSCI Emerging Markets Index advanced to the highest level since June 2008. NYSE Euronext (NYX) surged 13 percent after receiving a second takeover bid. The Stoxx Europe 600 Index climbed 1.5 percent. Oil rallied to near $108 a barrel, while corn jumped the exchange limit. Yields on 30-year Treasury bonds slipped two basis points to 4.49 percent.
The S&P 500 climbed to the highest level since February after U.S. payrolls grew by 216,000 workers last month and another report showed manufacturing expanded at near the fastest pace in seven years. China’s manufacturing accelerated while South Korea’s exports surged. Ireland said yesterday it won’t force losses on senior bondholders, even after revealing that it may need to inject 24 billion euros ($34 billion) into the financial system.
“The jobs report confirms that the U.S. economy is recovering in a slow grinding upwards move,” said Stephen Wood, the New York-based chief market strategist for Russell Investments, which manages $155 billion. “It means we’re very comfortable with our forecast that this will be a slightly better-than-average year for equities.”
Industrial, financial and consumer-discretionary companies led gains in eight of 10 industries in the S&P 500 after the benchmark gauge yesterday capped a 5.4 percent first-quarter rally. NYSE Euronext, operator of the New York Stock Exchange, jumped after Nasdaq OMX Group Inc. and IntercontinentalExchange proposed to buy the company for $42.50 in cash and stock, topping an offer from Deutsche Boerse AG.
U.S. equities pared gains in the final 90 minutes of trading amid speculation funds that track the S&P 500 were selling shares to raise money to purchase stock in BlackRock Inc., the investment firm replacing drugmaker Genzyme Corp. in the benchmark index after the close of trading today. BlackRock rose for a third day, climbing 0.7 percent.
“That 4 point gap down in the SPX a few minutes ago -- ’hearing’ that since BLK is getting added to the SPX after the close that Indexers are out there raising cash,” Dave Lutz, head of exchange-traded fund trading and strategy at Stifel Nicolaus & Co. in Baltimore, said in a note to clients, using the ticker symbols for the S&P 500 and BlackRock.
Today’s government jobs report also showed the unemployment rate unexpectedly declined to a two-year low of 8.8 percent. The Institute for Supply Management’s manufacturing index was little changed at 61.2, after February’s 61.4 reading that was the highest since May 2004. Figures greater than 50 signal expansion.
Oil in New York rose 1.1 percent to $107.94 a barrel, the highest settlement since Sept. 25, 2008. Corn extended a two-day rally to 11 percent after Department of Agriculture data yesterday showed lower supplies. The S&P GSCI Total Return Index of commodities climbed 0.8 percent to the highest level since November 2008.
The yield on the two-year Treasury note slipped three basis points to less than 0.80 percent, while the 10-year yield lost two basis points to 3.45 percent.
The gain in Treasuries came after Federal Reserve Bank of New York President William Dudley said the U.S. economy’s recovery is “still tenuous” and “far from the mark” of the central bank’s goals of full employment and price stability.
“We must not be overly optimistic about the growth outlook,” Dudley said in San Juan, Puerto Rico, today. “A stronger recovery with more rapid progress toward our dual mandate objectives is what we have been seeking. This is welcome and not a reason to reverse course.”
Fed Bank of Richmond President Jeffrey Lacker said the central bank should review whether to reduce its planned purchase of $600 billion in U.S. Treasury securities because of improving U.S. economic data. Minneapolis Fed President Narayana Kocherlakota told the Wall Street Journal that policy makers may need to increase their key rate 75 basis points by late 2011.
The MSCI Emerging Markets Index advanced 1.4 percent to the highest level since June 2008. Emerging-market equity funds attracted inflows of $2.6 billion in the week ended March 30, the most since the period ended Jan. 5, Citigroup Inc. said in a report today, citing data compiled by EPFR Global.
Bank of Ireland Plc, the country’s largest lender, jumped 41 percent as it outlined plans to avoid majority government control after being ordered to raise 5.2 billion euros following a stress test. Irish Life & Permanent Plc tumbled 59 percent as the state said it may take control of company. The yield on the Irish two-year note slipped 22 basis points to 9.65 percent, while default swaps on Ireland slid four basis points to 634.9.
Credit swaps on Portugal dropped 16 basis points to 564.7 after the government sold 1.6 billion euros of bonds due in June 2012. Contracts on Spain were eight basis points lower at 226.4. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments fell four basis points to 170.
The yen fell 1.1 percent versus the dollar, an eighth day of declines in its longest retreat since July 2005. The Dollar Index, which tracks the greenback against those of six trading partners, was little changed at 75.829.
Ivory Coast’s defaulted dollar bonds climbed 4.7 percent, extending the best week since they began trading last year. Fighters loyal to President-elect Alassane Ouattara, a former deputy managing director of the International Monetary Fund, entered Laurent Gbagbo’s last stronghold in Abidjan to oust the incumbent leader.
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