Stocks, Euro Rise on Debt Plan
Stocks climbed, sending the Standard & Poor’s 500 Index up for the week, Treasuries fell and the euro rose as Europe set plans to boost its rescue fund and U.S. consumer confidence beat forecasts.
The S&P 500 climbed 1.7 percent to close at 1,255.19 at 4 p.m. in New York, leaving it up 0.9 percent for the week. The Stoxx Europe 600 Index added 1.2 percent and the euro increased 0.3 percent to $1.3375. Ten-year Treasury yields rose nine basis points to 2.07 percent. The 10-year Italian bond yield fell 10 basis points to 6.36 percent, reversing a 23-point increase. The S&P GSCI Index of commodities added 0.2 percent, reversing earlier losses, as lead, silver and copper rallied.
European leaders holding all-night talks in Brussels added 200 billion euros ($267 billion) to their crisis-fighting fund and tightened anti-deficit rules, an accord hailed by European Central Bank President Mario Draghi as a “very good outcome.” A gauge of U.S. consumer confidence climbed to a six-month high as Americans’ outlook improved.
“Things are incrementally getting resolved in Europe -- not out of the woods but at least we have some sort of framework,” Jeffrey Schwarte, a money manager who helps oversee about $231 billion in Des Moines, Iowa, at Principal Global Investors, said in a telephone interview. “It’s challenging over there. But if you look at the underlying data in the U.S., it’s actually very strong relative to other developed markets.”
Struggling for Gain
The S&P 500 has struggled to stay above its 2010 closing level of 1,257.64 since rising above it during the last week of October. The index has shown a year-to-date gain during 18 sessions since Oct. 27, including today, only to later turn lower for 2011. It ended today down 0.2 percent for the year.
The index has rebounded 14 percent from its low for the year on Oct. 3 as better-than-forecast U.S. economic data helped alleviate concern the world’s largest economy would relapse into a recession. The Citigroup Economic Surprise Index, which measures whether data is beating or missing estimates, is near its highest level since March after rebounding from an almost three-year low in June.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment for December rose to 67.7 from a final November reading of 64.1. The gauge was projected to rise to 65.8, according to the median forecast of 73 economists surveyed by Bloomberg News.
Goldman Sachs Group Inc. economists increased their fourth- quarter U.S. economic growth tracking estimate to 3.4 percent from 2.9 percent following Commerce Department data showing the U.S. trade deficit shrank 1.6 percent to $43.5 billion in October, smaller than projected, from $44.2 billion in September.
Financial, energy and industrial companies led the S&P 500’s advance today, with each group (SPXL1) rising more than 2 percent. Citigroup Inc., JPMorgan Chase & Co. and Bank of New York Mellon Corp. climbed at least 2.8 percent to pace gains in 22 of 24 stocks in the KBW Bank Index, which rallied 2.7 percent.
General Electric Co. rose 3.3 percent to help lead the Dow Jones Industrial Average (INDU) up 186.56 points after boosting its quarterly dividend to 17 cents a share. Cooper Cos. jumped 17 percent, the most in three years, after the maker of contact lenses forecast earnings that topped estimates. DuPont Co. slid 3.2 percent after cutting its full-year forecast.
The S&P GSCI Index recovered from an earlier 1 percent drop led by agricultural commodities on signs of increasing supplies. Crude oil rose 1.1 percent to $99.41 a barrel in New York, recovering from a 1 percent drop earlier.
Cocoa fell for a 12th day in the longest slump in at least 50 years on signs of growing supplies. Bean arrivals at Ivory Coast ports totaled 428,200 metric tons from the start of the season through to Dec. 4, up 16 percent from a year earlier, Natixis Commodity Markets Ltd. said in a report e-mailed yesterday.
Four stocks gained for each that declined in the Stoxx 600. Intesa Sanpaolo SpA surged 7.9 percent to lead banks to the biggest gain among 19 industries after saying that European Banking Authority tests showed the Italian lender doesn’t need to raise capital. Alcatel-Lucent SA, France’s largest telecommunications-equipment supplier, climbed 7.1 percent as Sanford C. Bernstein & Co. upgraded the shares.
Italian two-year notes erased earlier losses, with the yield falling 28 basis points to 5.96 percent, as the ECB bought the nation’s debt, according to three people with knowledge of the trades, who declined to be identified because the transactions are confidential. The yield earlier jumped as much as 40 basis points. A spokesman at the ECB in Frankfurt declined to comment.
Europe’s blueprint for a closer fiscal union to save the single currency left pressure on central bankers to address investor concerns that Italy and Spain would succumb to the two- year-old financial crisis. While ECB President Draghi hailed the accord, investors urged him to expand his bond-purchase program to fight the debt crisis.
“The European Central Bank is going to be forced, I think, to take more dramatic action,” Stuart Eizenstat, a former undersecretary of State and deputy Treasury secretary under President Bill Clinton, told Bloomberg Television. “And now that they have this fiscal pact in place, they’ve got the cover to do so. So really this is the time to step up and say to the markets we’re going to stand behind our member states’ sovereign debt.”
Belgian 10-year yields fell 12 basis points, while Spanish yields were seven basis points lower. German bunds reversed gains, sending the yield up 13 basis points to 2.15 percent after it earlier fell to 1.98 percent.
The MSCI Emerging Markets Index slipped 1.2 percent and lost 2.6 percent in the week. The Hang Seng China Enterprises Index sank 3.2 percent in Hong Kong, India’s Sensex slipped 1.7 percent and South Korea’s Kospi Index (KOSPI) slumped 2 percent. Russia’s Micex Index (INDEXCF) declined 4.1 percent before a demonstration tomorrow in Moscow to protest alleged ballot-box stuffing in Dec. 4 elections.
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