S&P 500 Gains on Earnings; Treasuries, Mexico Peso Rise

U.S. stocks rose, sending the Standard & Poor’s 500 Index to a record, as sales at Amazon.com Inc. and Microsoft Corp. beat estimates. Treasuries climbed amid bets the Federal Reserve will maintain stimulus and Mexico’s peso climbed as the central bank signaled a halt to rate cuts.

The S&P 500 increased 0.4 percent to 1,759.13 and the Nasdaq-100 Index added 0.6 percent to a 13-year high of 3,383.83 at 4 p.m. in New York. Ten-year Treasury yields lost 1.5 basis points and the Bloomberg U.S. Dollar Index was little changed. The peso strengthened against all 16 major peers. West Texas Intermediate crude rose for a second day, while coffee futures extended the longest slump in 11 years.

Microsoft said business software and cloud services boosted revenue, while Amazon’s sales jumped before the holiday shopping season. Metal prices recovered after retreating earlier as China’s one-month interbank rate surged the most since June. German business confidence unexpectedly declined this month, while the U.K.’s economy expanded at a faster pace in the third quarter. Data on U.S. consumer confidence and capital goods orders trailed estimates.

“The market is refocusing itself on corporate earnings, which are turning in somewhat better than expected,” Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Capital Management, said by phone from Atlanta. His firm oversees about $48 billion. “Valuation is still reasonable and the economy appears to getting better. The market does look a bit extended so it wouldn’t surprise me if we saw some near-term pullback.”


The S&P 500 has risen more than 23 percent in 2013, challenging a similar gain in 2009 for the best yearly rally in a decade. The advance has pushed valuations to 16.7 times reported earnings, the highest level since May 2010 while close to the average of about 16.4 over the last 10 years. Earnings beat the average analyst estimate at 76 percent of the 244 companies in the index that have released results so far in the latest reporting season, data compiled by Bloomberg show.

U.S. equities capped a third straight weekly gain, with the S&P 500 climbing 0.9 percent in five sessions and the Dow Jones Industrial Average increased 1.1 percent.

Microsoft jumped 6 percent to the highest price since July after quarterly sales and profit exceeded analyst estimates. Microsoft is weathering slumping personal-computer sales by focusing on its Xbox video game system, business software and cloud services, as departing Chief Executive Officer Steve Ballmer seeks to make the company less dependent on its Windows operating system.

Amazon, Zynga

Amazon surged 9.4 percent to a record $363.39. The world’s largest online retailer said its quarterly net loss narrowed to $41 million from $274 million a year earlier as revenue jumped 24 percent. Zynga Inc. soared 5.5 percent as it posted a smaller-than-expected loss because purchases of items used in computer games exceeded the company’s forecast.

Utility, telephone and consumer-discretionary shares led gains in all 10 of the main S&P 500 industry groups. A government report showed orders for U.S. equipment such as computers and machinery unexpectedly declined in September for the second time in three months, indicating business spending was weakening ahead of the partial government shutdown earlier this month.

Bookings for non-military capital goods excluding aircraft decreased 1.1 percent, the Commerce Department reported. The median forecast in a Bloomberg survey called for a 1 percent gain. A surge in aircraft demand led to a 3.7 percent jump in total durable orders.

Economic Data

Consumer confidence in the U.S. dropped in October to a 10-month low, showing the reopening of the federal government failed to reassure households. The Thomson Reuters/University of Michigan final consumer sentiment index decreased to 73.2, the weakest this year and below the median estimate in a survey of economists for a decline to 75.

The Stoxx Europe 600 Index slipped less than 0.1 percent. About three stocks fell for every two that rose on the Stoxx 600.

A gauge of carmakers retreated as Renault SA dropped 3.2 percent. France’s second-largest carmaker reported third-quarter revenue that dropped 3.2 percent to 8 billion euros ($11 billion), missing the average analyst estimate of 8.5 billion euros in a Bloomberg survey. Volvo AB slid 6.6 percent after the world’s second-biggest truckmaker reported earnings before interest and taxes that unexpectedly declined and missed the average analyst estimate in the three months through September.

U.K. Economy

A report from the Office for National Statistics showed that U.K. gross domestic product expanded 0.8 percent in the third quarter, its fastest pace in more than three years, as the recovery continued in every major industry. That matched the median estimate of 40 economists surveyed by Bloomberg.

Treasury 10-year note yields dropped 1.5 basis points, or 0.015 percentage point, to 2.51 percent, according to Bloomberg Bond Trader prices. The yield lost 7 basis points this week, extending its decline from this year’s high of 3.005 percent on Sept. 6.

Italian 10-year bonds fell for a third consecutive day, pushing the yield seven basis points higher to 4.22 percent.

Sweden’s krona strengthened against 14 of 16 major peers, adding 0.5 percent to 8.7230 per euro after a report showed consumer confidence increased.

New Zealand’s currency weakened 0.9 percent to 82.82 U.S. cents as it fell versus all 16 major peers after central bank Governor Graeme Wheeler said he was “concerned” a stronger currency may dent trade. New Zealand’s dollar retreated 0.4 percent against the Aussie, extending its slide this week to 1.6 percent. A fifth week of declines would be the longest stretch since May 2012.

New Zealand

“We have a very strong exchange rate,” Reserve Bank of New Zealand Governor Graeme Wheeler said in an interview with the national radio broadcaster. Increasing interest rates “would put upward pressure on the exchange rate and damage our traded-goods sector. We’re quite concerned about that risk.”

Copper climbed 0.1 percent to $7,185 a metric ton, after earlier losing as much as 0.3 percent. China is the biggest buyer of industrial metals. West Texas Intermediate oil increased 0.7 percent to $97.80 a barrel and is down almost 3 percent this week, its biggest retreat since September.

Gold analysts are bullish for a second week on speculation that prolonged U.S. stimulus and a weakening dollar will boost demand for the metal as a haven.

Seventeen analysts surveyed by Bloomberg News expect prices to advance next week, nine are bearish and six neutral. The Bloomberg U.S. Dollar Index, a measure against 10 currencies, slid to an eight-month low this week as U.S. employers added fewer jobs than expected last month. Gold’s 30-week correlation coefficient to the index is at minus 0.54, with a figure of minus 1 meaning the two always move in opposite directions.

Government Shutdown

A 16-day U.S. government shutdown this month probably hurt economic growth, at a time when the Federal Reserve is debating whether to trim stimulus. Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system. The metal tumbled into a bear market in April and is heading for its first annual drop in 13 years as some investors lost faith in bullion as a store of value.

Japan Tumble

Japanese stocks fell, with the Topix index slumping 2.1 percent for the worst drop in more than two months, as the yen extended gains against the dollar during Tokyo trading hours and exporters slid. Toyota Motor Corp., Asia’s largest car manufacturer, fell 2.1 percent. SoftBank Corp., a mobile-phone company, lost 4.8 percent after a report Alibaba Group Holding Ltd. abandoned plans for an initial public offering in the near term.

After markets closed in Asia and Europe, an earthquake with a magnitude of 7.6 struck 311 miles east-northeast of Tokyo, Pacific Tsunami Warning Center said in preliminary earthquake report.

Developing-nation stocks retreated for the third day, with the MSCI Emerging Markets Index losing 0.4 percent today and 1.4 percent in five sessions, the steepest weekly decline in two months. The Shanghai Stock Exchange Composite Index and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong each lost more than 1 percent.

Mexican Peso

Mexico’s peso rallied after the central bank cut the benchmark interest rate for the second straight month in an effort to revive the economy from the slowest growth since it slipped into recession amid the 2009 global financial crisis.

Banco de Mexico reduced the overnight lending rate by 25 basis points to a record-low 3.50 percent, saying that reducing borrowing costs below this level wouldn’t be advisable. The cut was forecast by 21 out of 26 economists surveyed by Bloomberg. Three expected a half-point reduction, while two predicted rates would stay on hold.

Coffee futures fell as the crop outlook improved in Brazil, the world’s largest grower, boosting speculation that the global glut will expand. Arabica coffee for December delivery fell 1.1 percent to $1.091 a pound, the lowest in more than four years. The commodity capped a ninth straight decline, the longest slump since January 2002.

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