Dow Extends Longest Rally Since ‘96; Treasuries Pare Loss

U.S. stocks rose, extending the longest rally for the Dow Jones Industrial Average since 1996, and the dollar strengthened as faster-than-forecast growth in retail sales bolstered optimism in the economy. Treasuries pared losses as an auction drew a lower-than-forecast yield.

The Dow rose for a ninth day, adding 5.22 points to 14,455.28, and the Standard & Poor’s 500 Index increased 0.1 percent. The Stoxx Europe 600 Index erased most of an earlier 0.5 percent decline to close little changed, while Chinese shares slid to a two-month low. Ten-year Treasury yields increased less than 1 basis point to 2.02 percent after adding as much as 3.5 points earlier. The S&P GSCI Index of commodities fell 0.4 percent, reversing an earlier gain. The Dollar Index reached the highest level since August.

Commerce Department data showed sales at U.S. retailers rose 1.1 percent in February, the most in five months and more than twice the median estimate of economists. Industrial production declined 0.4 percent in January in the 17-nation euro area, exceeding a 0.1 percent decline forecast by economists, and adding to signs that the region’s recession extended into the first quarter.

“The retail number was nice and that’s helping lessen concern that the combination of high gas prices and taxes would combine to slow down consumer spending,” Erick Maronak, chief investment officer at Victory Management Inc., said over the phone. The New York-based firm oversees about $3 billion. “On balance things look pretty good.”

Market Leaders

Retailers and other companies that rely on discretionary consumer spending rose 0.5 percent collectively to lead gains in the 10 main industries in the S&P 500 today, with Kohl’s Corp., Best Buy Co. and Nike Inc. gaining more than 2.5 percent.

International Business Machines Corp., McDonald’s Corp. and Boeing Co. had the biggest gains in the Dow today as the 30-stock gauge set a record high for a seventh straight day.

Netflix Inc. jumped 5.6 percent after announcing new social features integrated with Facebook Inc. Spectrum Pharmaceuticals Inc., a maker of cancer medicines, plunged 37 percent after saying sales will miss analysts’ estimates. Express Inc. tumbled 3.2 percent after forecasting first-quarter and full-year earnings below analyst estimates.

Goldman Sachs Group Inc. increased its estimate for first-quarter economic growth to 2.9 percent from 2.6 percent today following the retail sales data and another report that showed stronger-than-forecast growth in U.S. business inventories.

The S&P 500 rebounded after falling yesterday, ending a seven-day winning streak that drove the index within nine points of its all-time high. The benchmark gauge has more than doubled from its bottom in 2009 amid a rally fueled by corporate earnings that topped estimates and monetary stimulus from the Federal Reserve.

The S&P 500 may follow the Dow to a record by the end of the month, giving investors a chance to sell, according to technical analysts at UBS AG. The index, up more than 9 percent so far this year, will continue its advance before the expiry of options contracts at the end of March, heading for a resistance level of 1,560 to 1,570, Michael Riesner and Marc Mueller wrote in a report dated yesterday.

Bull Markets

Another year or more of gains may lie ahead for U.S. stocks if history is any guide, according to Jeffrey Kleintop, LPL Financial Corp.’s chief market strategist. The bull market that began in March 2009 is the seventh to last at least four years since World War II, as Kleintop wrote two days ago in a report. Four of the previous rallies ran for five years or more, and the fifth year produced a 22 percent average gain for the S&P 500. Still, the Boston-based strategist wrote, the index may be overdue for a drop of 5 percent or more before resuming gains.

Treasury Auction

Rates on 30-year bonds were little changed at 3.22 percent after climbing three points earlier, while two-year note yields increased less than one basis point to 0.26 percent.

The $21 billion of 10-year notes sold today drew a yield of 2.029 percent, compared with a forecast of 2.057 percent in a Bloomberg News survey of eight of the Federal Reserve’s 21 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 3.19, versus an average of 2.92 at the past 10 sales.

The Stoxx 600 has retreated this week after climbing to a 4 1/2-year high on March 8. Adecco SA, the world’s biggest supplier of temporary workers, lost 2.1 percent today after fourth-quarter profit missed analyst estimates. Enel SpA sank 6 percent as Italy’s largest utility said earnings tumbled 79 percent last year and won’t recover until 2017. Prudential Plc advanced 9.3 percent as the U.K.’s biggest insurer by market value raised its dividend and reported income that beat projections.

Europe Yields

Italian 10-year bonds fell after 7 billion euros ($9 billion) of debt sales and Spain’s securities ended a run of 10 straight gains.

Italy’s 10-year bond yield rose six basis points to 4.67 percent and Spain’s rose four points to 4.77 percent. As well as an Italian auction today, Germany sold 4.3 billion euros of two-year notes, Britain issued 1.5 billion pounds ($2.2 billion) of 2052 securities and Ireland sold 5 billion euros of 10-year bonds via banks.

Ireland laid the foundation to regain its economic sovereignty, with the biggest bond sale since the near-collapse of its financial system forced the nation to seek a bailout in 2010.

The euro currency weakened against 11 of 16 major peers, dropping more than 0.6 percent versus the British pound and Mexican peso. The dollar strengthened against 14 of 16 major peers and the Dollar Index, a gauge of the currency against six major trading partners, added 0.4 percent to a seven-month high of 82.93.

The yen erased an earlier gain versus the dollar after strengthening as much as 0.6 percent 95.45 per dollar. Japan’s currency reached 96.71 yesterday, the weakest level since August 2009.

Bullish bets on Japan’s currency in the options market climbed to a nine-month high after the largest opposition party said yesterday it would vote against BOJ deputy governor nominee Kikuo Iwata, an advocate of quantitative easing.

China Real Estate

In China, the benchmark Shanghai Composite Index lost 1 percent to the lowest level since Jan. 11. Property shares slumped on concern policy makers will step up curbs after reported the city of Shenzhen banned developers from raising home prices.

“Property curbs and the central bank’s possible attitude towards tightening liquidity make investors nervous,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “There’s concern the economic recovery will falter.”

The MSCI Emerging Markets Index declined for a third day, losing 0.9 percent. Brazil’s Bovespa slid 1.5 percent

Energy and agricultural products led the S&P GSCI Index of commodities down, with soybeans, coffee and Brent crude dropping more than 1.1 percent for the biggest declines. West Texas Intermediate crude erased earlier gains to settle 2 cents lower at $92.52 a barrel.