Stocks Advance While Treasuries Retreat With Gold, Yen

Stocks jumped, sending the Standard & Poor’s 500 Index to a record, as China’s imports grew, Japan reiterated its stimulus plans and investors speculated earnings will beat estimates. Treasuries fell after minutes showed the Federal Reserve debated the end of its bond purchases.

The S&P 500 advanced 1.2 percent to 1,587.73 at 4 p.m. in New York and is up 2.2 percent this week, its best three-day rally since the beginning of January. National benchmark indexes climbed in all of the 18 western European markets except Iceland. The 10-year Treasury yield rose five basis points to 1.80 percent. Gold slid 1.8 percent after Cyprus said it plans to sell the metal to raise money. The yen fell to the weakest level versus the dollar since 2009 as Bank of Japan Governor Haruhiko Kuroda reiterated a pledge for all necessary steps to meet a goal of 2 percent inflation in two years.

Imports to China rose 14.1 percent in March from the year earlier, leaving the nation with an unexpected trade deficit. Several Fed officials said the central bank should taper its bond-buying program later this year and stop it by the end of 2013 if labor market conditions improve, according to minutes from the March meeting before government data showed the weakest jobs growth in nine months.

“The opportunity to make money in the long term lies in the equity markets,” Ewen Cameron Watt, the London-based chief investment strategist at the BlackRock Investment Institute, said on Bloomberg Television’s “Surveillance” with Tom Keene. “The longer you hold cash at zero rates, the longer you stand no chance of securing your financial future.”

Earnings Season

The Nasdaq-100 Index jumped 1.9 percent for the biggest gain since January. U.S. technology and financial shares, the largest industries in the S&P 500, climbed more than 1.1 percent collectively to help lead the rally in all 10 of the index’s main industries today.

Since the bull market began four years ago, the two groups have gained 2 percent on average in the first two weeks after Alcoa Inc. marked the start of the quarterly earnings season, according to data compiled by Bloomberg. The entire S&P 500 has gained 1.7 percent on average in those weeks.

Analysts predict earnings fell 1.8 percent in the first three months of the year, according to a Bloomberg survey on April 5. The projection compared with an estimate for a 1.9 percent drop seen on April 1, marking the first improvement in the survey this year. Three straight years of profit growth helped propel the index up more than 133 percent since 2009. The benchmark gauge of American stocks is trading for 15.6 times reported adjusted earnings, the highest in more than two years.

Market Movers

Constellation Brands Inc. and Bed Bath & Beyond Inc. are among six companies in the S&P 500 scheduled to report earnings today.

Equities have risen in 2013 as individual investors made deposits with money managers and professional speculators closed bearish bets. A gauge of hedge-fund bullishness measuring how much they’re betting on rising shares stands at 51.6 percent today, up from 47.3 at the end of 2012, according to data compiled by International Strategy & Investment Group.

“A lot of it is sentiment,” Rex Macey, who oversees $20 billion as chief investment officer at Wilmington Trust Investment Advisors in Atlanta, said by telephone. “People who were not in the market and people who had been nervous are starting to feel as if it’s safe to go back in the water.”

Apple, Yahoo

Apple Inc. and Yahoo! Inc. climbed more than 1.5 percent as the companies were said to discuss ways to collaborate more closely on mobile software. Pfizer Inc. rallied 2.8 percent after saying its palbociclib compound gets breakthrough designation as the potential treatment for breast cancer. Tenet Healthcare Corp. slipped 5.5 percent following an analyst downgrade.

President Barack Obama sent a $3.8 trillion budget to Congress today calling for more tax revenue and restraints on Social Security benefits in a political gamble intended to revive deficit-reduction talks. The president is proposing to replace across-the-board budget cuts known as sequestration with what White House budget officials say is $1.8 trillion in additional deficit reduction over 10 years that includes collecting more taxes from the wealthy and trimming some federal programs.

Fed Minutes

S&P 500 futures remained higher before the open of exchanges as the Fed released its minutes ahead of the previously scheduled 2 p.m. time because they were mistakenly sent to some people yesterday afternoon. Chairman Ben S. Bernanke left the pace of government and mortgage debt purchases at $85 billion a month at that meeting and said further improvement in the U.S. labor market is needed to consider reducing its monetary easing.

Several Fed officials “thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end,” according to the record of the Federal Open Market Committee’s March 19-20 meeting. Fed Bank of Atlanta President Dennis Lockhart said before the official release of the minutes that it’s too early for the central bank to consider reducing its pace of bond purchases following a weakening in the labor market.

The Fed minutes are “a synopsis of what we’ve been hearing from policy makers,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion, said in a phone interview. “Yes, it’s worrisome, but it’s not a new worry,” she said. “Earnings estimates have been brought down to the point that it’s a pretty manageable process for the companies to beat estimates,” she said.

Low Rates

The European Central Bank will keep rates low and continue injecting liquidity into the banking system, Governing Council member Christian Noyer said today on Europe 1 radio. Bailout loans to Portugal and Ireland should be extended by seven years to aid each country’s return to the market, international creditors recommended in a joint report.

The Stoxx Europe 600 Index climbed 1.8 percent for a third straight advance, the longest stretch of gains since January. Air France-KLM Group and EasyJet Plc gained more than 6.5 percent as analysts upgraded the airlines. The U.K.’s FTSE 100 Index rose 1.2 percent, while France’s CAC 40 Index added 2 percent and Germany’s DAX Index gained 2.3 percent.

Solar Stocks

Solar companies rallied, with Solarworld AG, Wacker Chemie AG and SMA Solar Technology AG rising at least 5.8 percent. First Solar Inc., the world’s largest thin-film solar manufacturer, surged 46 percent in New York trading yesterday after its sales forecast topped analyst estimates.

The MSCI Emerging Markets Index rose for a second day, advancing 0.9 percent, with benchmark gauges in India, the Czech Republic, Thailand and the Philippines gaining more than 1 percent. The Hang Seng China Enterprises Index of mainland companies increased 0.8 percent. Data from the customs administration showed exports rose less than forecast as imports topped estimates in March, leaving an unexpected trade deficit of $880 million.

South Korean stocks rose for a second day and the won strengthened against the dollar. South Korean and U.S. forces upgraded their joint surveillance “Watchcon” status by one level to monitor an imminent ballistic missile test, South Korea’s Yonhap news agency reported, citing unidentified military officials.

North Korea’s threats are raising the odds of the first interest-rate cut by its southern neighbor since October as they threaten to damp sentiment in Asia’s fourth-largest economy. Eleven of 20 economists forecast the Bank of Korea will reduce borrowing costs tomorrow, according to a Bloomberg News survey.

Weakening Yen

Japan’s currency weakened against all 16 major counterparts. Australia’s currency rose as high as $1.0552, the strongest since January, and climbed against all but one of its 16 major peers.

Japanese government bonds slid, with the yield on the five-year note rising to 0.28 percent, the highest in about a year. Prime Minister Shinzo Abe said in parliament that the BOJ’s stimulus is boosting stock prices and weakening the yen, though Japan is not intentionally debasing its currency.

Japanese stocks rose, with the Topix Index capping a six-day rally for its longest win streak this year, on optimism the yen’s weakness will improve the earnings outlook for exporters.

‘Exporting Sugar’

“Japan is now exporting sugar, the monetary kind,” said Howard Ward, chief investment officer at Rye, New York-based Gamco Investors Inc., which oversees $36.7 billion. “The Street has become much more positive on Japan and its growth prospects this year. The rally in Japanese equities helps sentiment and the sense that yield-starved Japanese investors may increase their purchase of euro debt has helped support the euro too.”

Gold for June delivery lost 1.8 percent to $1,558.80 an ounce for the biggest loss in five months. Cypriot authorities have committed to sell “the excess amount of gold” owned by the state, yielding an estimated 400 million euros ($522 million), according to a draft of a European Commission report obtained by Bloomberg News.

Gasoline, silver and copper also dropped at least 0.7 percent to help lead the S&P GSCI Index of commodities down 0.2 percent. Wheat futures fell the most in more than a week, with the July contract down 1.5 percent, after the U.S. Department of Agriculture said global inventories will be bigger than forecast last month.

World stockpiles of wheat before this year’s Northern Hemisphere harvest will total 182.26 million metric tons, more than the 178.23 million forecast in March, the USDA said. Analysts surveyed by Bloomberg expected 178.82 million. Prices have plunged into a bear market, down 25 percent from last year’s peak, on signs that global demand is slowing and that farmers will boost output in the next year.