Oil Slips Below $90 as Stocks Fluctuate After Dow Record

Stocks rose, extending the Dow Jones Industrial Average’s record high, as a private report showed faster-than-forecast U.S. job growth and the Federal Reserve said the economy is growing. Oil slid as U.S. inventories rose.

The Dow added 42.47 points, or 0.3 percent, to 14,296.24 at 4 p.m. in New York. The Standard & Poor’s 500 Index gained 0.1 percent to 1,541.46, while oil lost as much as 1.4 percent to trade below $90 a barrel for the second time this year. Brazil shares rallied the most since July. Ten-year U.S. Treasury yields added four basis points to 1.94 percent. Spanish 10-year borrowing costs dropped 3.5 basis points to 5.01 percent. Venezuelan bonds slid after President Hugo Chavez died.

The S&P 500 closed about 1.5 percent below its record today after the Dow’s move yesterday erased losses from the financial crisis. A private report from ADP Research Institute showed employers added 198,000 jobs last month, topping the median economist forecast for 170,000 and bolstering optimism before the government’s labor report on March 8. The U.S. economy grew at a modest to moderate pace across most of the country amid rising consumer demand for homes and autos, the Fed said in its Beige Book survey.

“The market’s responding to some degree to fundamentals,” Stephen Wood, who helps manage about $163 billion as New York-based chief market strategist for North America at Russell Investments, said by telephone. “The economy is growing, albeit at a frustrating pace,” he said. “We’re seeing housing begin to contribute rather significantly to the economy.”

‘Positive Implications’

The 198,000 increase in employment reported by ADP followed a revised 215,000 gain the prior month that was more than initially estimated. Government data in two days are forecast to show private payrolls grew by 170,000 jobs and the unemployment rate held steady at 7.9 percent, according to the median estimates of economists.

“ADP was better than expected, last month was revised up, that has positive implications for the jobs number Friday,” Philip Orlando, chief equity strategist at Federated Investors, which has about $380 billion in assets under management, said by telephone.

U.S. stocks climbed yesterday after the Institute for Supply Management’s index of non-manufacturing businesses, which covers about 90 percent of the U.S. economy, increased to 56 last month, its highest level in a year. Yesterday’s rally was also triggered after China’s government said it will keep its economic growth target at 7.5 percent for this year and plans a 10 percent jump in fiscal spending.

U.S. Movers

Among stocks moving today, Bank of America Corp. rose 3.2 percent to pace gains among financial shares. VeriFone Systems Inc. increased 8.6 percent as the maker of credit-card terminals reported earnings that beat its forecasts. Staples Inc. fell 7.2 percent after forecasting profit that was less than analysts estimated.

Freeport-McMoran Copper & Gold Inc. jumped 4.1 percent. The world’s second-largest copper miner may double sales of copper concentrate to China in the next three years as mined production expands, according to Javier Targhetta, the company’s senior vice president of marketing and sales.

About $10 trillion has been restored to U.S. equities since the bear-market low on March 9, 2009, fueled by the fastest profit growth since the 1990s and monetary stimulus from the Federal Reserve. Retailers, banks and manufacturers led the recovery from the worst bear market since the 1930s as the Dow took less than 65 months to rise above its previous high set on Oct. 9, 2007, more than a year faster than the recovery from the Internet bubble.

The S&P 500 has jumped 128 percent from its bear-market low four years ago. The index trades for 15.2 times reported earnings, compared with a multiple of 17.5 when it reached its record in October 2007.

‘Turning Point’

“The good news is we do not seem to be anywhere close to the kind of cyclical turning point we were on the cusp of in October 2007, suggesting the stock market may have more room to run,” Julia Coronado, chief North America economist for BNP Paribas SA in New York, wrote in a report. “However, the bad news is that we do not have anything like the kind of robust growth dynamic that had led us to a cyclical peak.”

Brazil’s Bovespa rose 3.6 percent, the most since July 27. Voting shares of Petrobras soared 9 percent, the biggest gain since December 2008, after the state-controlled oil producer said the government unexpectedly approved a 5 percent increase in diesel prices.

Wheat, corn, lead and zinc also dropped at least 1.5 percent to lead the S&P GSCI Index down 0.7 percent. Copper fell to a 15-week low, slumping 0.6 percent to $3.493 a pound, as rising inventories and a drop in U.S. factory orders fueled demand concerns.

‘Bigger Build’

Oil dropped for the fourth time in five days, settling 0.4 percent lower at $90.43 a barrel, after the Energy Information Administration said supplies rose 3.83 million barrels, more than four times the 788,000-barrel median estimate in a Bloomberg survey of analysts.

“The inventory numbers showed a much bigger build and fundamentally, we should go down,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “Chavez’s death didn’t really have an impact in the market but I do think we have to watch to see which kind of government does come out there.”

The Stoxx Europe 600 Index erased early gains to close down 0.2 percent. Gross domestic product in the 17-nation euro bloc fell 0.6 percent in the fourth quarter, the European Union’s statistics office said today, confirming an initial Feb. 14 estimate.

Vodafone, Admiral

Vodafone Group Plc surged 6.8 percent after people familiar with the situation said Verizon Communications Inc. is working to resolve its relationship with Vodafone this year, with options under consideration including an end to their wireless joint venture and a full merger of the two companies.

Admiral Group Plc, the U.K. motor insurer that owns the website, climbed 5.3 percent to a 17-month high as full-year profit beat estimates. Edenred slid 4.5 percent as investment firm Eurazeo SA sold a 10 percent stake in the French provider of prepaid voucher programs.

The six-day advance for Spanish bonds is the longest run since August. Italian securities also rose, with 10-year yields dropping eight basis points to 4.66 percent.

The yield on German 10-year bunds, Europe’s benchmark government securities, rose less than one basis point to 1.46 percent. U.S. The Swiss franc weakened against 14 of 16 major peers, falling 0.3 percent to 1.2314 per euro and declining 0.7 percent to 94.75 centimes per dollar, amid reduced demand for haven currencies.

Chavez Dies

Venezuela’s dollar-denominated bonds fell for a second day. President Chavez died following a battle with cancer and his deputy stepped in to run the country, South America’s biggest oil exporter.

The yield on the $4 billion of notes maturing in 2027 rose to 9.12 percent, the highest since Jan. 22, after Vice President Nicolas Maduro said on state television that Chavez died at a military hospital in Caracas and urged Venezuelans to refrain from violence.

The MSCI Emerging Markets Index rose 0.9 percent, led by commodity, financial and industrial stocks. Kenya’s shilling slumped against 14 of 16 major peers as results from presidential elections on March 4 were delayed. The currency of East Africa’s biggest economy weakened 1.7 percent versus the dollar.

Australia’s dollar advanced against 12 of 16 major counterparts. The nation’s fourth-quarter GDP advanced 0.6 percent from the previous three months, when it rose a revised 0.7 percent that was higher than initially reported, a Bureau of Statistics report released in Sydney today showed. The result matched the median of 28 estimates in a Bloomberg News survey.

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