S&P 500 Gains to Record as Treasuries Fall; Crude Slips
U.S. stocks rose, with the Standard & Poor’s 500 Index and the Dow Jones Industrial Average closing at records, as jobless claims unexpectedly fell and measures of consumer confidence beat estimates. Treasuries dropped while crude oil tumbled as a report showed U.S. supplies climbed.
The S&P 500 added 0.3 percent to 1,807.23 by 4:35 p.m. in New York and the Dow climbed 0.2 percent. The Nasdaq Composite Index extended gains beyond the 4,000 level to the highest close in 13 years. Treasuries fell for the first time in five days after a seven-year note sale attracted the least demand since 2009. Oil slid to an almost six-month low as U.S. inventories rose a 10th week. European stocks climbed while the yen weakened a fifth day versus the euro to a four-year low.
Fewer Americans than projected filed applications for unemployment benefits last week, while the Thomson Reuters/University of Michigan index of consumer sentiment rose. A measure of German consumer confidence from Nuremberg-based GfK AG climbed to the highest level since August 2007. Chancellor Angela Merkel reached a coalition agreement with the Social Democrats, more than two months after the German leader’s Christian Democratic Union won national elections.
Today’s data “is in some sense a re-affirmation that things are going along pretty decently,” Bill Schultz, the chief investment officer at McQueen Ball & Associates in Bethlehem, Pennsylvania, where he oversees about $1.1 billion, said by phone. “Are we going to get higher rates again? Is tapering still out there? The market is playing with what’s going to come next and how we position going forward given a number of uncertainty still sitting out there.”
The S&P 500 has rallied 26.7 percent this year, putting it on track for its biggest annual gain since 1997, after the Fed continued the pace of its record monetary stimulus. The index is up 2.9 percent this month, with valuations near their highest level since the end of 2009. The S&P 500 trades for about 16.3 times member companies’ projected earnings, data compiled by Bloomberg show. U.S. equities and Treasury markets will be closed tomorrow for the Thanksgiving holiday.
U.S. jobless claims in the week ended Nov. 23 declined 10,000 to 316,000, the fewest in two months, the Labor Department said today in Washington. The index of U.S. leading indicators rose for a fourth straight month in October, reflecting gains in factory orders and applications to begin new-home construction. Other data showed the index of consumer sentiment in November unexpectedly rose to 75.1 from 73.2 a month earlier.
Bookings for American goods meant to last at least three years decreased 2 percent, matching the median forecast of economists surveyed by Bloomberg after a 4.1 percent gain in September that was larger than initially reported, the Commerce Department said.
Fed policy makers have been scrutinizing data to determine whether the U.S. economy is strong enough to withstand a reduction in their $85 billion a month of bond purchases. Three rounds of quantitative easing have helped push the S&P 500 up more than 166 percent from a bear-market low reached in 2009.
Four out of five investors expect the Fed to delay a decision to begin reducing the stimulus until March 2014 or later, according to a Nov. 19 Bloomberg Global Poll.
Former Fed Chairman Alan Greenspan said the U.S. economy probably will grow more slowly next year than some forecasters predict, and indicated that record-high U.S. stocks doesn’t mean there’s a bubble.
“This does not have the characteristics, as far as I’m concerned, of a stock market bubble,” Greenspan said in an interview on Bloomberg TV’s “Political Capital with Al Hunt,” airing this weekend. “It could come out that way but I don’t see it at this stage.”
The U.S. economy is forecast to grow 2.6 percent next year, following a growth rate of 1.7 percent this year, according to a Nov. 8-13 Bloomberg survey of 73 economists.
Treasuries headed for their first monthly decline since August. Benchmark 10-year yields rose three basis points, or 0.03 percentage point, to 2.74 percent after today’s auction of $29 billion in seven-year notes. Longer-term debt received less support than the two- and five-year note sales amid speculation the Fed will keep short-term interest rates lower for longer.
The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.36, compared with an average of 2.59 for the previous 10 sales. The seven-year notes drew a yield of 2.106 percent, compared with the forecast of 2.088 in a Bloomberg News survey of six of the Fed’s 21 primary dealers.
“The auction was very sloppy,” said Thomas di Galoma, head of U.S. rates sales at ED&F Man Capital Markets in New York. “Forward guidance takes you out to five years. Seven years is no man’s land.”
The yield on current seven-year notes climbed three basis points to 2.06 percent.
Technology shares (DFMGI) gained the most among 10 major groups in the S&P 500, rallying 1 percent. Hewlett-Packard Co. jumped 9.1 percent to the highest level since February 2012 after the maker of personal computers posted revenue and profit that topped analysts’ estimates. Apple Inc. climbed 2.4 percent.
Energy shares slumped 0.7 percent as oil prices declined. Schlumberger Ltd. and Noble Energy Inc. fell at least 1.6 percent.
Crude oil fell for a fourth day, with West Texas Intermediate dropping 1.5 percent to $92.30 a barrel. The spread between WTI and Brent crude widened to the most in eight months.
Crude supplies rose 2.95 million barrels to 391.4 million last week, the highest level since June, according to the Energy Information Administration. The report was forecast to show a 750,000-barrel gain, according to a Bloomberg survey. U.S. crude production increased 45,000 barrels a day to 8.02 million, the highest level in almost 25 years.
Gold futures dropped 0.3 percent to $1,237.90, sliding for a third straight day. Prices are heading for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation that the Fed will slow its monthly debt purchases as the U.S. economy improves.
A gauge of commodity producers pulled The Stoxx Europe 600 Index higher as Rio Tinto Group and Glencore Xstrata Plc climbed more than 0.8 percent. Vivendi SA rose 0.9 percent after the board approved a plan to spin off its SFR mobile-phone business in France.
Accor SA dropped 7.5 percent after reversing a plan to divest properties. The Paris-based company said it will focus on operating and owning hotels. Veolia Environnement SA (VIE) fell 3 percent after Electricite de France SA sold its 4 percent stake in the business after the close of trading yesterday.
The Shanghai Composite Index rose 0.8 percent and Thailand’s SET (SET) Index climbed 1.1 percent, its biggest one-day advance in three weeks. Yields on 3.125 percent Thai debt due December 2015 dropped 13 basis points to 2.74 percent. The nation’s bonds and equities rose even as protesters besieged government ministries this week, demanding that Prime Minister Yingluck Shinawatra step down.
The Indonesian rupiah weakened 1 percent to its lowest level in more than four years. The ruble depreciated for a third day against the Russian central bank’s basket of dollars and euros used to manage the currency. Shares in Dubai rose for a second day amid investor bets the emirate will win its bid to host the Expo 2020. The BUX index in Hungary added 0.9 percent.
The yen slid 0.9 percent to 138.72 per euro, the weakest intraday level since August 2009. The dollar strengthened 0.9 percent to 102.16 yen. The pound rose to its strongest level since December 2012 against the greenback after a report confirmed that U.K. economic growth accelerated in the third quarter.
Yields on benchmark German 10-year bunds added three basis points to 1.72 percent.
“I don’t think anyone in the market really doubted that Germany would find a stable coalition, but it just adds to the overall sense of continuity in Europe,” said Ned Rumpeltin, head of Group-of-10 currency strategy at Standard Chartered Bank in London.
The cost of insuring corporate bonds against losses was little changed at a 3 1/2-year low, with the Markit iTraxx Europe index of credit-default swaps on 125 investment-grade companies falling 0.3 basis points to 78 basis points, the lowest since April 2010.