S&P 500 Rises as Dollar Weakens, Treasuries Fluctuate
U.S. stocks rose, extending a monthly rally, as reports indicated the American economy is growing at a pace that won’t hasten the end of Federal Reserve stimulus. Japanese stock futures climbed after shares plunged in the regular session, while the dollar weakened.
The Standard & Poor’s 500 Index added 0.4 percent to 1,654.41 and the Stoxx Europe 600 Index increased 0.4 percent after tumbling 1.9 percent yesterday. Japan’s Topix Index slid 3.8 percent, taking its decline from the recent peak to more than 10 percent, the threshold for a correction. Gauges of currency-market and Treasury volatility jumped to the most in almost a year. The 10-year Treasury yield was little changed at 2.11 percent and the Dollar Index slid 0.8 percent. Gains in aluminum, silver, lead and gold helped the S&P GSCI commodities index erased most of an earlier 1 percent drop.
The U.S. economy grew at an annualized 2.4 percent pace in the first quarter, down from a preliminary reading of 2.5 percent, the Commerce Department said. Fed Chairman Ben S. Bernanke said last week the central bank could reduce the pace of bond purchases if there is a sustained improvement in growth. Other reports showed fewer Americans than forecast signed contracts to buy previously owned homes and jobless claims increased.
“The take away from today’s statistics is that there’s going to continue to be a bias to keep QE in place,” Matthew Kaufler, fund manager at Federated Investors Inc. in Rochester New York, said by telephone. The firm manages about $380 billion. “As long as that perception exists, it’ll be positive for financial assets. That’s why you’re seeing the tilt upward in prices.”
The S&P 500 advanced 3.6 percent this month, poised for a seventh straight monthly gain for its longest rally since 2009.
NV Energy Inc. surged 23 percent, the most in a decade, after Warren Buffett’s MidAmerican Energy Holdings Co. said it will pay $5.6 billion for Nevada’s biggest utility. Clearwire Corp. jumped 29 percent after Dish Network Corp. raised its bid for the company. Alcoa Inc. slipped 1.1 percent after Moody’s Investors Service cut its rating on the company’s debt to one level below investment grade.
Applications for jobless benefits increased 10,000 to 354,000 in the week ended May 25, Labor Department figures showed. Economists called for 340,000 claims, according to the median forecast in a Bloomberg survey.
The index of pending home sales rose 0.3 percent after a 1.5 percent gain in March, figures from the National Association of Realtors showed. Economists forecast April contract signings would match the prior month’s increase, according to the median estimate in a Bloomberg survey.
The Stoxx 600 has climbed about 2.3 percent in May and is headed for a 12th straight month of gains, its longest rally since 1997. A gauge of European mining companies climbed 1.5 percent, the most in a week, as Randgold Resources Ltd. (RRS) rose 5.8 percent.
Economic confidence in the euro area increased in May, adding to signs the region is beginning to emerge from the longest recession in the single-currency era, the European Commission said today.
The MSCI Emerging Markets Index fell 0.5 percent and is down 2.4 percent in May, heading for the biggest monthly loss in a year. The Philippine Stock Exchange Index tumbled 3.8 percent today, the most since September 2011, and the Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong sank 0.6 percent.
Japanese stock-index futures climbed following a report that the nation’s public pension fund may boost its equities holdings and as the International Monetary Fund was said to support government stimulus policies.
Nikkei 225 Stock Average futures expiring in June rose 1.5 percent to 13,810 in Osaka, having earlier surged as much as 2.8 percent. The underlying gauge closed 5.2 percent lower at 13,589.03 today, entering a correction after sliding more than 10 percent from the May 22 high.
Japan’s $1 trillion Government Pension Investment Fund is considering changes that would allow a greater investment in equities, Reuters reported today, citing unidentified people familiar with the matter.
The JPMorgan Global FX Volatility Index climbed to 10 percent, the highest since June.
Treasury volatility as measured by the Bank of America Merrill Lynch MOVE index rose to 81.22 yesterday, also the highest level since June. The 10-year note yield fell five basis points yesterday and surged 16 basis points the day before.
Italy’s 10-year bond yield fell seven basis points to 4.12 percent after touching 4.23 percent, the highest since April 19. The government auctioned 5.75 billion euros ($7.45 billion) of five- and 10-year securities, matching its target.
Gold climbed for a second day, with August futures rising 1.5 percent to $1,412 an ounce. Prices are down 4 percent this month, after falling 7.8 percent in April when the metal went into a bear market. Aluminum, lead, zinc, silver and copper each advanced at least 0.7 percent today.
West Texas Intermediate for July delivery added 0.5 percent to $93.61 a barrel, reversing an earlier 1.6 percent retreat, before tomorrow’s OPEC meeting in Vienna. There’s no reason to change the output quota, Kuwait’s OPEC Governor Siham Razzouqi said today. Saudi Arabia, the world’s biggest crude exporter, said yesterday the market is balanced.
Wheat was down 0.6 percent, paring an earlier 2.2 percent loss, after Japan suspended imports from the U.S. after the government discovered an unapproved, genetically modified strain growing in an Oregon field.
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