S&P 500 Extends Record as Facebook Jumps; Treasuries Drop

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The Standard & Poor’s 500 Index extended a record as a rally in Facebook Inc. and growth in global manufacturing overshadowed a drop in home sales. Treasuries fell as jobless claims declined, while copper rose.

The Standard & Poor’s 500 Index rose 0.1 percent at 4 p.m. in New York, after closing at a record yesterday. Equities pared gains after Portugal’s Espirito Santo Financial Group SA sought protection from creditors. The yield on 10-year Treasuries climbed for a second day, increasing 3 basis points to 2.50 percent. The Hang Seng Index jumped 0.7 percent to the highest close since April 2011 and copper rallied 1.9 percent. Gold fell 1.1 percent, while crude prices slipped 1 percent.

Global equities climbed as data showed euro-area manufacturing and services grew in July while Chinese factory activity rose to an 18-month high. Economic reports in the U.S. were mixed, with fewer new U.S. homes sold in June than forecast while jobless claims unexpectedly fell. Facebook rallied after saying second-quarter sales surged 61 percent, while Caterpillar’s outlook disappointed investors.

“Earnings are coming in better than expected and the market has taken a queue from that but the economy overall is kind of a mixed bag,” John Kvantas, director of equity research at USAA Investments, said in a phone interview. He helps oversee $63 billion in mutual fund assets.

Amazon.com Inc. and Starbucks Corp. are among 50 companies in the S&P 500 reporting earnings today. About 77 percent of S&P 500 members that have posted results this season have beaten analysts’ estimates for profit, while 65 percent exceeded sales projections, according to data compiled by Bloomberg. Profits probably rose 6.2 percent in the second quarter, while sales gained 3.3 percent, according to analyst estimates compiled by Bloomberg.

‘Quite Impressed’

The S&P 500 rose 0.2 percent yesterday as Apple Inc. helped push technology companies higher, while health-care stocks rallied on earnings. The gauge has advanced 7.6 percent this year amid better-than-estimated corporate results and central-bank support. The index trades at 18.2 times the reported earnings of its members, the highest since 2010.

“I don’t think the market can go much higher in the short term because it’s overbought, but I don’t expect any meaningful correction,” said Pierre Mouton, who helps oversee $8 billion at Notz, Stucki & Cie. in Geneva. “I’m quite impressed with the results I’ve seen till now. In most cases, we’ve had companies beating on revenues and earnings, and posting positive outlooks.”

Facebook Rally

Facebook jumped 5.2 percent to a record as the operator of world’s biggest social network said mobile advertisements helped profit more than double as sales surged. Qualcomm Inc. declined 6.7 percent after forecasting quarterly profit that may trail projections. General Motors Co. lost 4.5 percent after reporting quarterly profit that missed analysts’ projections.

Caterpillar, the largest maker of mining machinery, dropped 3.1 percent, the most in the Dow Jones Industrial Average, as it forecast full-year sales and earnings that fell short of analysts’ estimates and said there’s no sign of an upturn in the industry in 2014.

Amazon.com Inc. sank 7.5 percent in late trading after reporting a loss wider than analysts’ projected.

The International Monetary Fund lowered its outlook for growth as expansions weaken from China to the U.S. and military conflicts raise the risk of a surge in oil prices.

The world economy will advance 3.4 percent in 2014, the IMF said, less than its 3.6 percent prediction in April and stronger than last year’s 3.2 percent. Next year growth will be 4 percent, compared with an April forecast for 3.9 percent, the fund said.

Monetary Policy

“Global growth could be weaker for longer, given the lack of robust momentum in advanced economies” even as interest rates stay low, the IMF said in an update to its World Economic Outlook report. “Monetary policy should thus remain accommodative in all major advanced economies.”

The benchmark 10-year yield climbed as jobless claims dropped to the lowest level in more than eight years.

Investors are assessing the Federal Reserve’s plans to raise interest rates next year. Fed Chair Janet Yellen said last week U.S. interest rates will probably stay low for a “considerable period” after the central bank ends the bond-buying program it has used to support the economy. The central bank may conclude its debt purchases after its October meeting, she said.

Housing shares plunged today, with an S&P index of home builders sinking 4.9 percent for its biggest drop in a year, as sales of newly built homes declined 8.1 percent to a 406,000 annualized pace. That’s the fewest since March and less than any economist surveyed by Bloomberg forecast, following a May reading of 442,000 that was 12.3 percent lower than estimated last month.

Factory Data

The Markit Economics preliminary index of U.S. manufacturing fell to 56.3 in July from a four-year high of 57.3. Readings exceeding 50 in the purchasing managers’ gauge indicate expansion.

Overseas reports showed euro-area manufacturing and services activity strengthened, in a sign of confidence that further stimulus by the European Central Bank will consolidate a fledgling economic recovery. A rise in a Chinese manufacturing gauge bolstered the government’s chances of meeting its 2014 economic-growth target of about 7.5 percent.

European Shares

The Stoxx 600 advanced 0.4 percent after adding 1.5 percent in the past two days. The gauge is less than 2 percent away from its six-year high on June 10.

Nokia Oyj jumped 7.3 percent after the Finnish network-equipment maker boosted its profitability forecast. Danske Bank A/S advanced 4.6 percent after Scandinavia’s second-largest lender by assets delivered its best quarterly result since 2008. Banco Comercial Portugues SA climbed 8.1 percent after Banco de Sabadell SA raised its stake to 5.53 percent.

Espirito Santo Financial Group, the holder of 20 percent of Banco Espirito Santo SA, Portugal’s second-biggest lender by market value, fell 8.9 percent. After the European market closed, the company sought protection from creditors.

Global financial markets were roiled early this month after another holding company in the group, Espirito Santo International SA, missed payments on commercial paper.

Russia Sanctions

The Micex Index of Russian stocks rose 0.2 percent, erasing an earlier loss of as much as 0.9 percent. The Ukrainian Equities Index increased 0.1 percent, also reversing declines, as Prime Minister Arseniy Yatsenyuk resigned after two parties quit the ruling coalition and President Petro Poroshenko signaled his support for early elections.

The European Union is preparing to sanction top Russian security officials, including the chiefs of the main successor agency to the Soviet-era KGB and foreign intelligence, over the conflict in Ukraine, according to a draft document obtained by Bloomberg.

The U.S. is pushing Europe to toughen its stance toward President Vladimir Putin a week after the Malaysian jet was hit by a missile American officials say was probably fired from a Russian-supplied launcher. Russia denies involvement.

Crude oil declined 1 percent, following losses in gasoline as U.S. inventories of the fuel expanded for a third week, threatening to depress refining margins.

Copper rose 1.9 percent and zinc rallied 1 percent to the highest since August 2011. Gold declined for a third day, reaching the lowest level in five weeks.

China Manufacturing

A preliminary Purchasing Managers’ Index for China, the biggest consumer of industrial metals, rose to 52, exceeding the 51 median estimate of analysts in a Bloomberg survey, according to a report by Markit and HSBC Holdings Plc.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 1.1 percent to a seven-month high. The Shanghai Composite Index added 1.3 percent.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, rose 0.2 percent to 1,012.36, the highest since June 18.

The euro was little changed at $1.3463 after earlier falling to $1.3438, the lowest since Nov. 21. The 18-nation common currency strengthened 0.3 percent to 137.07 yen. The dollar gained 0.3 percent to 101.79 yen.

New Zealand’s dollar slid the most since November as the nation’s central bank said the currency’s strength is unjustified. The kiwi weakened by at least 0.9 percent against all 16 of its major peers. It lost 1.4 percent to 85.77 U.S. cents, the lowest since June 12.