Stocks, Commodities Gain on China Growth as Google Surges

Global stocks rose, extending a five-year high, and commodities gained as China’s economic growth quickened. Google Inc. jumped as much as 14 percent to a record above $1,000 on better-than-forecast earnings. Treasury 10-year note yields touched a 12-week low.

The MSCI All-Country World Index advanced 0.7 percent to 396.25, the highest since May 2008. The Standard & Poor’s 500 Index added 0.7 percent to 1,744.50, reaching a record for a second day. The yield on 10-year Treasury notes was little changed after dropping to 2.54 percent, the lowest level since July 24. China’s yuan had its best week in a year. Wheat, sugar and nickel rose more than 1 percent to lead commodities higher.

China’s gross domestic product expanded 7.8 percent last quarter, the statistics bureau said in Beijing today, matching the median estimate in a Bloomberg News survey of economists and halting a two-quarter slowdown. Federal Reserve Bank of Chicago President Charles Evans said yesterday the U.S. shouldn’t reduce stimulus after some economic reports stopped during a 16-day government shutdown. Google, General Electric Co. and Morgan Stanley joined the 70 percent of S&P 500 companies beating earnings estimates so far in the reporting season.

“The immediate focus over the next two to three weeks will be on third-quarter earnings,” Matthew Kaufler, a portfolio manager at Federated Investors Inc. in Rochester, New York, said by phone. His firm oversees $363.8 billion. “My concern would be on a very short-term basis that some companies are going to use the drama of the past couple of weeks as a pretext to lower the bar. Even if there is some weakness to forward guidance, I think that’s going to get shrugged off and we’re going to finish the year pretty strong.”

S&P 500 Record

The S&P 500 extended its record for a second day. The Nasdaq 100 Index advanced 1.6 percent to a 13-year high as Google rallied after the world’s largest Internet search engine reported sales that topped estimates. The Dow Jones Industrial Average added 0.2 percent, with UnitedHealth Group Inc. sliding 3.7 percent for the biggest decline.

General Electric gained 3.5 percent after reporting adjusted earnings of 36 cents a share, compared with an average estimate of 35 cents in a Bloomberg survey. Morgan Stanley climbed 2.6 percent on better-than-projected earnings.

Among 100 companies that have reported quarterly results so far, 70 exceeded profit estimates while 55 percent beat sales projections, according to data compiled by Bloomberg.

Stock Rally

U.S. stocks are rallying at the fastest pace in almost two years after Congress resolved the budget standoff and investors shifted their focus to Fed stimulus and forecasts for record corporate profits.

While declining revenue dragged down shares of International Business Machines Corp. and Goldman Sachs Group Inc. yesterday, investors have reasons to be optimistic heading into a time of year that has generated twice the return for stocks than other periods. The S&P 500 rallied 4.7 percent in the previous seven days, the most since December 2011, rebounding from losses spurred by concern the U.S. was approaching a default.

With the debate over the budget and debt ceiling probably over for this year, investor attention will turn to earnings and the Fed’s schedule for tapering economic stimulus. Equities climbed back to all-time highs yesterday and more than 260 companies in the S&P 500 are set to report quarterly results in the next two weeks, the busiest time of earnings season.

European Markets

The Stoxx Europe 600 Index increased 0.8 percent. The gauge has climbed for seven straight days, the longest winning streak this year. Almost five stocks advanced for every one that gained, with trading volumes 9.6 percent above the 30-day average.

Schindler Holding AG jumped 4.3 percent, the most since November 2011, after the Swiss maker of elevators said it will buy back shares. Grifols SA slipped 3.5 after Alken Asset Management LLP sold a 2.7 percent stake in Europe’s biggest maker of blood-plasma products.

The MSCI Emerging Markets Index gained 0.7 percent, extending its weekly advance to 1.7 percent. India’s S&P BSE Sensex climbed 2.3 percent and Russia’s Micex Index advanced 1.6 percent, with both markets rebounding from a two-day slump. Benchmark gauges in Taiwan and Thailand added at least 0.8 percent.

China Markets

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.7 percent and the Shanghai Composite Index added 0.2 percent. The yuan climbed to a 20-year high after the People’s Bank of China boosted its fixing, advancing 0.4 percent this week, the most since the five days ended September 2012.

“China’s economic growth is stabilizing and that added more confidence into markets going into next year,” said Caroline Maurer, a Singapore-based fund manager at Henderson Global Investors, which oversees $110 billion of assets. “We are also likely to see some impact to the U.S. fourth-quarter data because of the shutdown, which could mean any Fed tapering is likely to be put off a bit later.”

The dollar was little changed at $1.3685 per euro after reaching $1.3704, the weakest since Feb. 1. It has dropped 1.1 percent since Oct. 11, the most since the period ended Sept. 20. The U.S. currency slipped 0.1 percent to 97.83 yen.

The Aussie strengthened 0.4 percent to 96.73 U.S. cents, the highest since June, and set for a 2.1 percent gain this week.

Europe Bonds

Germany’s 10-year bond yield fell four basis points to 1.83 percent and the rate on similar-maturity U.K. gilts dropped three basis points to 2.72 percent.

The S&P GSCI gauge of 24 commodities added 0.6 percent. Copper advanced 0.9 percent this week, its first gain for the period in three weeks. West Texas Intermediate crude oil rebounded after touching a three-month low yesterday. Gold fell 0.6 percent to settle at $1,314.60 an ounce.

Wheat climbed 2.4 percent on the Chicago Board of Trade, gaining for a second day, on speculation the pace of exports from the U.S. will be sustained.

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