U.S. Stocks Climb Amid Tech Rebound; Gold, Oil AdvanceJeremy Herron and Callie Bost
U.S. stocks gained as a recovery in technology shares helped the Nasdaq 100 Index rebound from its worst three-day drop since 2011. Oil, gold and Treasuries rose while the Bloomberg Dollar Spot Index slid to a five-month low.
The Nasdaq 100 Index of mostly technology stocks rose 0.9 percent after a 4.3 percent slide since April 2. The Standard & Poor’s 500 Index climbed for the first time in four days, adding 0.4 percent to 1,851.96, while the Dow Jones Industrial Average increased 10.27 points to 16,256.14. Gold futures advanced 0.8 percent to $1,309.10 an ounce. Oil jumped more than 2 percent before a government report forecast to show supplies fell in Cushing, Oklahoma, the delivery point for the West Texas Intermediate crude.
Yahoo! Inc., EBay Inc., Google Inc. and Facebook Inc. jumped more than 2 percent, after a technology selloff broadened yesterday to wipe out the year’s gains in the S&P 500. Alcoa Inc. reported better-than-estimated first-quarter earnings after U.S. markets closed. Ukraine sent additional police forces into eastern regions after pro-Russian protesters seized government buildings.
“It’s little real news, it’s more grinding around than driven by some specific items,” William Stone, chief investment officer of PNC Wealth Management in Philadelphia, which manages $128 billion, said by phone. “It doesn’t surprise me that we found a little stabilization here waiting for earnings season to start. That’s the primary kind of real data we’re going to get this week.”
The S&P 500 lost 1.1 percent yesterday, extending its three-day drop to 2.4 percent, the most since January. The Nasdaq 100 gauge fell 4.3 percent in the period, the most since 2011, while the Russell 2000 Index of small companies sank 1.5 percent to a two-month low yesterday as its three-day loss worsened to 4.8 percent. The Russell 2000 advanced 0.8 percent today.
The selloff came as valuations in technology stocks soared while the broader market has touched all-time highs. The Nasdaq 100 surged 257 percent from its low in March 2009 through a 13-year high on March 5. That beat the 177 percent increase for the S&P 500 in the period. The S&P 500 closed at a record on April 2.
“Biotech and tech companies were trading at lofty valuations and they finally succumbed to the gravitational pull,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which oversees $63 billion in assets, said by phone. “A lot of these growth stocks had been taken down 10 to 20 percent, but usually that loss finds a bottom.”
Alcoa rose 0.5 percent to $12.53 in the regular session. Shares of the largest U.S. aluminum producer climbed another 1.8 percent in extended trading after the company reported profit that surpassed analysts’ estimates as it benefited from a supply bottleneck at domestic metals warehouses. JPMorgan Chase & Co. and Wells Fargo & Co. are among S&P 500 companies reporting earnings this week.
Profit for members of the index probably climbed 1 percent in the first quarter, analysts now forecast, after projecting a 6.6 percent rise in January. Sales rose 2.9 percent on average, according to analyst estimates compiled by Bloomberg.
Gold for June delivery advanced to the highest level in almost two weeks and has gained about 9 percent this year, rebounding from the biggest annual drop in more than three decades. Silver rose 0.7 percent to $20.01 an ounce.
“Gold is finding support from geopolitical tension as the Ukraine situation is heating up again,” Dan Denbow, a portfolio manager at the $1 billion USAA Precious Metals & Minerals Fund in San Antonio, said in a telephone interview. “The dollar weakness is also helping gold. We are seeing interest in overall commodities.”
West Texas Intermediate oil climbed 2.1 percent to a one-month high of $102.56 a barrel. Crude also rebounded amid speculation that gasoline supplies dropped for a seventh week in the U.S., the world’s biggest oil consumer.
Brent for May settlement advanced $1.85, or 1.7 percent, to $107.67 a barrel on the ICE Futures Europe exchange in London. Russia called on Ukraine to halt all military preparations in the east “immediately” or risk civil war. The U.S. has said there is evidence that some protesters may be paid provocateurs.
Ten-year U.S. Treasury yields lost two basis points to 2.68 percent, falling for a fourth day and reaching the lowest level since March 18.
The MSCI Emerging Markets Index added 0.6 percent for a third day of gains and reached the highest level of the year.
Developing nations face new risks and Russia’s takeover of Crimea last month injects geopolitical tension that’s “casting a pall” on the region, the International Monetary Fund said in a report today. The fund urged emerging markets to prepare for flows of capital back to advanced economies.
Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the IMF said.
Russian stocks reversed earlier losses, with the Micex Index adding 0.2 percent. Russian companies should consider delisting their shares from foreign stock exchanges and trade in Moscow to boost security amid the standoff over Ukraine, according to Deputy Prime Minister Igor Shuvalov.
“Companies and their boards of directors should consider the need for further trading of shares on foreign exchanges,” Shuvalov told reporters after a government meeting near Moscow today. “This is a question of economic security.”
Price swings in currency markets have tumbled to a six-year low as central banks from the U.S. to Japan seek to boost growth with cheap cash and record-low interest rates, encouraging investors to seek higher-yielding assets.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, fell 0.6 percent to 1,008.56, the lowest level since October. The yen advanced 1.4 percent to 101.71 per dollar and the euro gained 0.4 percent to $1.3796.
The JPMorgan Global FX Volatility Index was little changed at 7 percent, after ending at 6.98 percent yesterday, the lowest since July 2007.
“There certainly has been more interest again in emerging markets, suggesting that many investors are again looking out for yield,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. “That’s clearly a risk-on scenario that is dollar-negative.”
The Stoxx Europe 600 index pared earlier losses of 1 percent to close 0.3 percent lower after falling from a six-year high yesterday. The index trades at 14.1 times estimated 12-month earnings, compared with an average multiple of 11.4 times over the past five years.
“Ukraine worries, coupled with stock valuations which are high, are taking their toll on European markets,” Stephane Ekolo, chief European strategist at Markit Securities in London, wrote in an e-mail. “We are seeing an aggravation in the situation in Ukraine with some eastern provinces trying to declare independence and turning towards Russia.”