Stocks, Treasuries Rise on Fed as S&P 500 Tops 1,800

U.S. stocks and Treasuries rose, as improving economic data offset concerns that the Federal Reserve will cut monetary stimulus as soon as next month. The euro strengthened after German business confidence climbed to the highest in more than 1 1/2 years.

The Standard & Poor’s 500 Index advanced 0.5 percent to a record 1,804.76 at 4 p.m. in New York, capping its seventh straight weekly gain and leaving it poised for the best annual gain since 1998. The Stoxx Europe 600 Index added 0.1 percent after earlier rising as much as 0.6 percent. The euro climbed 0.6 percent to $1.3558. The yield on 10-year Treasury notes fell 4 basis points to 2.75 percent. West Texas Intermediate oil lost 0.7 percent.

Job openings in the U.S. climbed to a five-year high in September, indicating employers were confident about demand before the federal government shutdown. Reports yesterday showed weekly jobless claims fell to the lowest level since September and American consumers became less pessimistic this month. Germany’s Ifo business climate index climbed more than predicted in November, exceeding all 43 economist forecasts in a Bloomberg News survey.

“There’s really no deterrent for the market to move forward,” Karyn Cavanaugh, a vice president and market strategist at ING U.S.Investment Management in New York, said in a phone interview. Her firm oversees $196 billion. “There’s not really any bad news. We have a little bit of a pullback and then people jump in and say, ’Hey, I want a piece of this.’”

Weekly Rally

The S&P 500 rallied yesterday on the jobless data after three days of losses. The gauge advanced 0.4 percent over the five-day period, extending its longest weekly winning streak since February. The Dow Jones Industrial Average gained 0.3 percent today after closing yesterday above 16,000 for the first time. It has rallied seven straight weeks, the best streak since January 2011.

Minutes of the Fed’s October meeting released Nov. 20 showed officials may reduce their $85 billion a month of bond-buying if the economy improves as anticipated. Stimulus from the Fed has helped the S&P 500 soar 167 percent since its March 2009 low. The index rallied 27 percent this year, headed for its best annual performance in 15 years.

David Tepper, the hedge-fund manager who runs Appaloosa Management LP, said stock markets are not inflated, as economies in the U.S., Europe and China are on “firm ground.” He said that while he remains bullish on U.S. stocks, markets may fall 5 percent to 10 percent when the Fed curbs its monthly stimulus program. He said his firm recently bet against U.S. Treasuries as a hedge.

Bubble Talk

“I know there’s talk about bubbles, this is not one,” Tepper said in an interview with Bloomberg Television’s Stephanie Ruhle at the Robin Hood Investors Conference in New York yesterday. United Continental Holdings Inc. climbed 3.7 percent after Tepper said that his “big play in the market” is airlines.

Time Warner Cable Inc. surged 10 percent to a record after people with knowledge of the matter said Comcast Corp. and Charter Communications Inc. have discussed a joint bid for the company. Foot Locker Inc. rallied 4.1 percent after it posted higher-than-estimated quarterly earnings. Intel Corp. lost 5.4 percent to $23.87 after the world’s largest maker of semiconductors said revenue will be approximately unchanged in 2014.

In Europe, Whitbread Plc and Daily Mail & General Trust Plc gained more than 3 percent after banks raised their stock ratings. Rhoen-Klinikum AG fell 3.3 percent after saying its second-biggest shareholder sued to block the sale of 43 clinics to Fresenius SE’s Helios unit. TUI Travel Plc and Eurazeo SA lost more than 4.6 percent after investors sold shares.

German Confidence

The 17-nation euro rose against 11 of its 16 major counterparts and added 0.7 percent to 137.29 yen, reaching its strongest level against the Japanese currency since October 2009. The yen fell 0.2 percent against the dollar to 101.34.

German business confidence rose in November. The Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 109.3 from 107.4 in October. Economists forecast a gain to 107.7, according to the median of 43 estimates in a Bloomberg News survey.

Data released today confirmed a preliminary estimate that showed German economic growth slowed to 0.3 percent in the third quarter from 0.7 percent in the previous three months. The expansion was driven by domestic demand that offset weaker exports, the report showed.

Treasury Tool

Treasuries rose as 10-year note yields at the highest level in two months yesterday attracted buyers. Fed policy makers discussed creating a program to buy short-term Treasury securities to keep yields in line with their policy intentions, according to minutes of their October meeting.

Such a tool could help reinforce the Fed’s commitment to keep the benchmark overnight lending rate near zero even after it starts to reduce its $85 billion in monthly bond purchases.

The yield on benchmark 10-year German government bonds climbed 1 basis point to 1.75 percent, after rising to 1.78 percent yesterday, the highest since Nov. 13.

The Australian dollar slipped 0.7 percent to 91.68 U.S. cents, for a 2.1 percent loss since Nov. 15, the biggest drop among 16 major currencies tracked by Bloomberg.

Reserve Bank of Australia Governor Glenn Stevens said yesterday he’s open-minded about intervention to weaken its currency.

“Every indication is for low interest rates in the developed world for a very long time,” said Daniel Weston, a portfolio manager at Aimed Capital GmbH in Munich. “Investors believe equities are the place to be.”

Oil Slide

Crude oil fell 0.7 percent to $94.77 a barrel in New York after jumping 1.7 percent yesterday.

Brent crude’s premium over West Texas Intermediate reached reached an eight-month high as rising U.S. inventories weighed on prices and nuclear negotiators with Iran made little progress.

WTI declined as rising domestic production added to crude inventories at record highs for this time of year. Brent touched a five-month high as envoys stumbled in their efforts to ease the standoff over the atomic ambitions of Iran.

“It’s hard to ignore all the tailwinds to this market,” Chris Bouffard, chief investment officer of the Mutual Fund Store in Overland Park, Kansas, which oversees $8.5 billion, said in a phone interview. “We’ve got low oil, that’s definitely helping consumers, especially going into the key holiday spending period. Buybacks and dividends are doing very well. Housing continues to do pretty well and there’s basically no inflation to speak of.”

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