Stocks, Commodities Rise as Yen Weakens; Treasuries Drop
Stocks (SXXP) rose, sending the benchmark European gauge to a four-month high, commodities gained and the yen weakened amid better-than-estimated corporate earnings and speculation central banks will boost efforts to lift growth.
The Standard & Poor’s 500 Index advanced 0.7 percent at 10:30 a.m. in New York. The Stoxx Europe 600 Index added 0.6 percent. Standard Chartered Plc tumbled the most since at least 1988 after a U.S. regulator said the lender may face a suspension of business activities. The yen depreciated against all 16 major counterparts and the Dollar Index lost 0.1 percent. U.S. and German bonds retreated. Natural gas, cocoa and copper rallied more than 1 percent to lead gains in commodities.
Chesapeake Energy Corp., Sirius XM Radio Inc. and Fossil Inc. were among U.S. stocks that rallied after reporting earnings. Federal Reserve Bank of Boston President Eric Rosengren told CNBC the central bank should pursue an “open- ended” easing program of “substantial magnitude” to boost growth and hiring amid a global slowdown. German Chancellor Angela Merkel backed a bond-buying plan announced last week by the European Central Bank, a spokesman said yesterday.
“Any shift in sentiment can result in a powerful move upward in the market,” Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania, said in a telephone interview. His firm manages about $6.5 billion. “Earnings have come in well above expectations. Expectations about Fed action help and there’s more confidence today that Europe is inching closer to a credit plan to avert a financial crisis.”
Energy, industrial and financial shares led gains among the 10 main groups in the S&P 500 today while JPMorgan Chase & Co., Bank of America Corp. and American Express Co. rose more than 1.4 percent for the biggest gains in the Dow Jones Industrial Average.
Fossil, the maker of jewelry and leather goods, rallied 32 percent after its profit and earnings forecast topped estimates amid increasing sales of its Skagen brand. Chesapeake Energy Corp., the second-largest U.S. natural-gas producer, jumped 9.2 percent after reporting the highest quarterly profit in company history and boosted its asset-sales target to plug a looming funding shortfall. Sirius XM Radio Inc. jumped 2.1 percent after adding subscribers and boosting its forecast.
Earnings have topped analysts’ average estimate at about 73 percent of the S&P 500 companies which reported second-quarter results so far, according to data compiled by Bloomberg.
Four shares rose for every two that declined in the Stoxx 600, with basic-resource and energy producers leading gains. Standard Chartered slid 17 percent after a New York regulator said it may stop the bank from doing business in the state because it handled transactions for Iranian institutions that are subject to U.S. sanctions.
Elan Corp. sank 9.2 percent to its lowest price this year. The Irish drugmaker wrote down to zero the value of its venture with Johnson & Johnson to develop an Alzheimer’s treatment.
Soybeans gained 0.7 percent after the U.S. Department of Agriculture said yesterday that about 39 percent of the U.S. crop was rated poor to very poor, up from 37 percent a week earlier. Oil added 0.7 percent to $92.81 a barrel in New York.
The yield on the 10-year U.S. Treasury note rose six basis points to 1.62 percent before the government sells $32 billion of three-year notes, the first of three auctions this week totaling $72 billion.
Spain’s 10-year yield dropped two basis points while its two-year rate climbed 15 basis points. The yield on Italy’s 10- year bond fell 10 basis points, and similar-maturity Portuguese debt yields declined 41 basis points.
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