Treasuries Gain With S&P 500 Little Changed After Record

Treasuries advanced on weaker-than-estimated retail sales while the Standard & Poor’s 500 Index was little changed after climbing above 1,900 for the first time. The euro slid on speculation over stimulus measures.

Ten-year Treasury yields slid five basis points to 2.61 percent as of 4 p.m. in New York. The S&P 500 added less than 1 point to 1,897.45 and the Dow Jones Industrial Average gained 0.1 percent, sending both gauges to records. The Russell 2000 Index slumped 1.1 percent. The MSCI All-Country World Index added 0.2 percent to extend a six-year high. The euro weakened 0.4 percent to $1.3702. India’s rupee strengthened and the S&P BSE Sensex extended a record as exit polls signaled the main opposition alliance won national elections.

American consumers took a respite from going to malls and restaurants as retail sales climbed less than forecast in April after the strongest gain in four years. The Bundesbank is willing to back measures from the European Central Bank next month if staff forecasts show a lower 2016 inflation outlook, the Wall Street Journal reported, citing a person familiar with the matter.

“We’ve had a stealth rally in the market to this record,” Eric Marshall, a portfolio manager at Hodges Funds in Dallas, said in a phone interview. The firm oversees about $2 billion. “The fact that we’ve moved up and hit new highs, in spite of some lingering negative sentiment, is a very healthy and positive thing for the market.”

U.S. stocks climbed yesterday, with the S&P 500 and Dow closing at records, as Internet and small-cap shares rallied. The Dow Jones Internet Index had its best day since January, as all 41 members advanced. The gauge slipped 0.5 percent today. The Dow industrial average has advanced for five straight days, the longest winning streak this year.

Technology Stocks

The Nasdaq Composite Index retreated 0.3 percent today, after gaining the most since January yesterday. While the technology-heavy gauge has recovered 3.3 percent from its April low, it remains 5.2 percent below a 13-year high in March. The Russell 2000 rebounded the most in two months yesterday. It tumbled 1.1 percent today, and is down 3.7 percent for the year.

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, fell 0.8 percent to 12.13, the lowest level since Aug. 5. The gauge has fallen 43 percent since reaching a two-year high on Feb. 3.

Investors have added $504 million to U.S. equity exchange-traded funds in the past five days and put $1.2 billion in bond ETFs, data compiled by Bloomberg show. Energy stocks saw the most money added among industry ETFs, increasing $301 million during the past week. Technology ETFs saw $808 million in outflows over the same period.

Retail Sales

U.S. retail sales climbed 0.1 percent last month after a revised 1.5 percent surge in March that was the biggest since March 2010, Commerce Department figures showed today. The median forecast of 83 economists surveyed by Bloomberg called for a 0.4 percent advance. Consumers were less inclined to ramp up spending last month after March saw a release of pent-up demand caused by harsh winter weather.

“We’re still in a nascent recovery,” Chad Morganlander, a fund manager at Stifel Nicolaus & Co., which oversees more than $150 billion, said in a phone interview from Florham Park, New Jersey. “We do believe there will continue to be an underlying improvement in economic trends over the course of this year.”

Treasuries climbed as the report reinforced bets that slower economic growth will keep inflation low.

Yellen Address

Federal Reserve Chair Janet Yellen is due to address the U.S. Chamber of Commerce this week. She said in testimony to Congress last week the U.S. economic recovery is uneven. While data show “solid growth” in the second quarter, “many Americans who want a job are still unemployed” and the economy still requires support, the Fed chief said.

Macy’s Inc., Wal-Mart Stores Inc. and Kohl’s Corp. are among 12 companies in the S&P 500 scheduled to disclose results this week, giving investors insight into how retailers performed during the winter months.

About 76 percent of the 455 S&P 500 companies that have released results this earnings season have beaten estimates for profit, while 53 percent have exceeded revenue projections, data compiled by Bloomberg show.

The euro weakened against 15 of its 16 major counterparts, sliding to a five-week low against the dollar.

“The euro is falling on a report that Weidmann is saying he’s ready to cut rates if needed,” said Manuel Oliveri, a currency strategist at Credit Agricole SA’s corporate and investment banking unit in London, referring to Bundesbank chief Jens Weidmann. “There’s a lot of focus on Weidmann because, as the Bundesbank president, he’s on the least dovish side when it comes to the ECB. This is supporting the notion that there’s a quite high probability of the ECB acting next month.”

ECB Stimulus

While Germany’s Bundesbank will focus on the outlook for price stability at the end of the ECB’s forecast horizon, nothing is decided yet, according to two people familiar with the matter.

The Stoxx Europe 600 gained 0.3 percent to the highest level since 2008 amid better-than-estimated earnings from ThyssenKrupp AG to Airbus Group NV. The gauge rose 7.6 percent from this year’s low on Feb. 4 as mergers-and-acquisitions activity increased and ECB President Mario Draghi said policy makers are ready to take action to support the economic recovery.

The U.K’s FTSE 100 climbed 0.3 percent to the highest level since 1999.

ThyssenKrupp rose 4.1 percent after Germany’s biggest steelmaker also raised its full-year earnings forecast. Airbus advanced 6.2 percent. Telecom Italia SpA declined 5.2 percent as quarterly revenue missed estimates.

Emerging Markets

The MSCI Emerging Markets Index gained 0.7 percent to the highest level since November. The rupee climbed as much as 0.8 percent to 59.5925 per dollar, the strongest on a closing basis since July. The S&P BSE Sensex advanced 1.4 percent.

Narendra Modi’s Bharatiya Janata Party and its allies will probably win 249 to 340 seats in India’s parliament, according to six exit polls released yesterday, the last day of the election. For a majority, 272 seats are required and final results will be announced May 16.

Russia’s Micex Index climbed 0.7 percent, extending gains to a fifth day. That’s the longest winning streak this year. Stocks and the currency rose on speculation the latest sanctions won’t hurt the economy. The Ukrainian Equities Index slid 3.2 percent and the hryvnia lost 0.5 percent.

Russia Sanctions

European Union foreign ministers at a meeting yesterday froze the assets of two companies after they were expropriated during Crimea’s annexation and added 13 people to a list of individuals facing asset freezes and travel bans for destabilizing Ukraine. Russia called disputed referendums in eastern Ukraine a sign of “deep crisis” as rebels there sought to secede and gas export monopoly OAO Gazprom gave Kiev a deadline to pay or risk being cut off.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fluctuated after China’s factory output and retail sales missed estimates. The Shanghai Composite Index dropped 0.1 percent after its biggest jump in seven weeks yesterday.

West Texas Intermediate oil rose 1.1 percent to a two-week high on speculation that U.S. crude inventories dropped a second week. Supplies probably slipped 250,000 barrels to 397.3 million last week, according to a Bloomberg survey before a government report tomorrow.

Gold futures slipped 0.1 percent and copper fell for the first time in four sessions.

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