Stocks Rally on Cyprus Accord as Italy Yields DeclineAdria Cimino and Nikolaj Gammeltoft
Stocks rose, sending the Standard & Poor’s 500 Index to a record close, as concern over Europe’s debt crisis eased and U.S. factory orders topped forecasts. Gold fell and Italian and Spanish bond yields slid.
The Standard & Poor’s 500 Index climbed 0.5 percent at 4 p.m. in New York. The Stoxx Europe 600 Index jumped 1.3 percent, the most in almost a month. The Cyprus General Market Index lost 2.6 percent after a two-week closure. Italy’s 10-year rate fell 14 basis points to 4.62 percent, while Spain’s yield slid 12 basis points to 4.94 percent. The euro weakened against most of its 16 major counterparts. U.K. natural gas slumped 15 percent and gold retreated the most in more than five weeks.
Cyprus was granted two extra years, to 2018, to implement measures linked to its bailout, government spokesman Christos Stylianides told reporters. Spain’s unemployment fell in March and a committee named by Italian President Giorgio Napolitano started work negotiating a new government. Orders placed with U.S. factories rose the most in five months in February, boosted by a pickup in demand for motor vehicles and commercial aircraft, a Commerce Department report showed today.
“The U.S economy is growing and, relative to the rest of the world, we’re far more stable,” Dan Veru, chief investment officer at Palisade Capital Management LLC, said by phone. The Fort Lee, New Jersey-based firm manages about $4 billion. “We get these little dust-ups whether it’s Cyprus or negative economic data but then the market comes back to the thinking that the best game in town is U.S. equities and that’s what is driving stocks.”
U.S. stocks fell yesterday as a report showed American manufacturing expanded less than forecast, after the S&P 500 climbed last week above its highest closing level reached in October 2007. The gauge rallied 10 percent in the first quarter, extending a recovery that has added more than $10 trillion of value to the world’s largest stock market.
BGC Partners Inc. soared 49 percent today after Nasdaq OMX Group Inc. agreed to buy its bond platform. Nasdaq tumbled 13 percent for its biggest drop since 2008. Humana Inc. jumped 5.5 percent as medical insurers won an increase in a key Medicare payment rate. Hewlett-Packard Co., the world’s biggest personal-computer maker, fell 5.2 percent after Goldman Sachs Group Inc. advised selling the shares.
U.S. companies begin releasing their first-quarter earnings next week, with Alcoa Inc. scheduled to announce results on April 8. Earnings among S&P 500 companies are forecast to decline 1.9 percent for the period, for the first retreat since 2009, according to estimates compiled by Bloomberg. In January, analysts forecast earnings growth of 1.2 percent. Profit expanded by 8 percent in the fourth quarter of 2012.
European stocks rallied after a four-day weekend. Three shares gained for each one that fell in the Stoxx 600. Vodafone Group Plc rallied 2.9 percent as the Financial Times’s Alphaville blog reported that AT&T Inc. and Verizon Communications Inc. are working on a joint offer for the mobile-phone company, citing unidentified people. Verizon and AT&T declined to comment, according to Alphaville.
The Cyprus General Market Index slid on its first day of trading since March 15. Hellenic Bank Pcl, the nation’s third-largest bank, plunged 20 percent to the lowest price since at least 1996.
Trading in Cypriot equities had been halted as the country faced a banking crisis and ejection from the euro. Shares in Cyprus Popular Bank Pcl and Bank of Cyprus Pcl, which make up 60 percent of the benchmark gauge’s weighting, will remain suspended until April 15, according to statement posted on the Cyprus Stock Exchange’s website.
The Cypriot government completed talks on the terms for aid with the so-called troika of officials representing the International Monetary Fund, the European Central Bank and the European Union. The accord, granting two extra years to implement measures linked to the island’s bailout, will be discussed at a euro working group meeting of finance officials on April 4.
In the U.S., a 3 percent gain in factory orders followed a revised 1 percent decline in January, the Commerce Department report showed. The median forecast of 64 economists in a Bloomberg survey called for a 2.9 percent rise.
“We’re very confident about the U.S. economy,” said Pierre Mouton, who helps oversee $6 billion as a portfolio manager at Notz, Stucki & Cie. in Geneva. “The U.S. market has performed better than the European one, but for good reason. The market isn’t expensive when you consider the growth’.”
The yield on 10-year Treasuries climbed from the lowest level in two months, rising three basis points to 1.86 percent. The rate on German bunds added 2 basis points to 1.31 percent.
West Texas Intermediate oil fluctuated amid speculation a report tomorrow will show that U.S. crude supplies rose to the highest level in more than 22 years. WTI oil for May delivery added 12 cents to settle at $97.19 a barrel.
Gold futures for June delivery fell 1.6 percent to $1,575.90 an ounce on the Comex, its biggest drop since Feb. 20. Global bullion holdings in exchange-traded products tumbled 6.9 percent last quarter, the most since at least 2004.
Gold is in a “bubble” and will head into a so-called bear market as improving U.S. economic growth prompts the Federal Reserve to curb stimulus efforts, Societe Generale SA analysts including London-based Robin Bhar said in a report today.
The MSCI Emerging Markets Index slipped 0.3 percent as trading resumed in Hong Kong and most European markets. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 0.8 percent and the Shanghai Composite Index fell 0.3 percent. The Philippine Stock Exchange Index retreated 1.3 percent, the biggest percentage loss in Asia, after valuations rose to an all-time high.
South Korea’s Kospi index slipped 0.5 percent and the won weakened 0.3 percent against the dollar. North Korea said it will restart all facilities at its Yongbyon nuclear site, including a uranium enrichment plant and a graphite-rod reactor mothballed since 2007, the official Korean Central News Agency said.