U.S. Stocks Rise as Euro Gains on Greece; Gold, Oil FallStephen Kirkland and Jeremy Herron
U.S. stocks rose, while the euro strengthened with European equities amid optimism fallout from anti-austerity party Syriza’s victory in Greece’s election will be contained. Gold and crude oil declined.
The Standard & Poor’s 500 Index added 0.3 percent by 4 p.m. in New York, following the gauge’s first weekly gain this year. The Stoxx Europe 600 Index advanced 0.6 percent to extend a seven-year high reached Friday. Europe’s shared currency strengthened 0.3 percent, reversing earlier declines. Greek stocks fell with bonds. Yields on 10-year Treasury notes rose three basis points to 1.83 percent. Gold futures slid the most this year as U.S. oil slipped to an almost six-year low.
While Greek Prime Minister-elect Alexis Tsipras has a mandate to confront the country’s austerity program, investors have been speculating that Syriza’s ascension to power won’t force Greece’s exit from the currency bloc. Russia’s credit rating was cut to junk by Standard & Poor’s, putting it below investment grade for the first time in a decade. The New York Stock Exchange plans to operate on a normal schedule on Monday and Tuesday amid forecasts for a blizzard on the east coast.
“We’re sort of at an inflection point in the market,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said by phone. “It needs more to get it moving to higher levels. It’s just trying to digest all of this information and try to make heads or tails of it. You saw the Greek election although that was not a big surprise, or not a big market mover here today. Right now we’re at a little bit of a lull.”
New York officials told residents to stay at home as a blizzard forecasters are calling “life-threatening” approached the city. The Securities Industry and Financial Markets Association said it was not recommending an early close on the U.S. bond market today.
All physical and electronic operations will be fully available with core operations staff and market participants on site Monday and Tuesday, the NYSE said in an e-mail. The last time NYSE’s trading hours were changed because of a snowstorm was on Jan. 8, 1996, according to the exchange’s website.
Energy shares advanced 1.4 percent today, while technology stocks lost 0.4 percent as six of the 10 main S&P 500 groups rose. Microsoft Corp. fell more than 2 percent in after-hours trading, even as it reported second-quarter sales and profit that exceeded analysts’ estimates.
West Texas Intermediate crude erased earlier gains to settle down 1 percent at $45.15 a barrel, the lowest level since March 11, 2009. Oil had spiked higher after OPEC Secretary-General Abdalla El-Badri said he hopes the market will recover in a “reasonable time” and that the bloc is open to talks with outside producers.
The S&P 500 rallied 1.6 percent last week after European Central Bank President Mario Draghi said it plans to buy up to 1.14 trillion euros ($1.28 trillion) of private and public securities.
The Greek elections “infused a little bit more risk into the market, that’s why we’ve pulled back,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “More people are focusing on a pretty busy earnings calendar this week and the Fed commentary on Wednesday. Those are going to be the much bigger focus for traders.”
Federal Reserve officials are scheduled to begin a two-day policy meeting tomorrow. The central bank is trying to determine whether declining oil prices, a slowdown in European growth and any fallout from the Greek elections will threaten the U.S. recovery as it considers raising interest rates. Chair Janet Yellen told reporters after the last meeting not to expect higher borrowing costs before the end of April.
Tsipras, 40, has pledged to keep Greece within the single currency area as he negotiates a writedown of Greek debt and eases budget constraints that were imposed in return for aid after the country’s economic collapse.
The current round of funding expires on Feb. 28 and talks with the so-called troika -- the International Monetary Fund, the European Commission and the ECB -- for its renewal have stalled since September amid demands for further belt tightening.
Greek 10-year bonds fell, pushing the yield on the 2025 securities 68 basis points, or 0.68 percentage point, higher to 9.09 percent, after the rate dropped 56 basis points on Jan. 23. The benchmark equity gauge declined 3.2 percent, paring a 6.1 percent gain on Friday.
“If you are a broad European investor you should be relatively relaxed,” Michael Krautzberger, the London-based head of euro fixed income at the world’s biggest money manager BlackRock Inc. said in an interview on Bloomberg Television’s “The Pulse” with Francine Lacqua. “If you look at the long end in Italy, the long end in Spain, they are actually up in price, down in yield. If the market were super concerned about spillover we wouldn’t have those reactions.”
Spanish and Italian sovereign securities erased earlier declines on speculation the ECB’s plan may shield those nations’ securities from any selloff in Greece.
Italy’s 30-year yield fell 17 basis points to 2.52 percent and the rate on similar-maturity Spanish debt dropped 12 basis points to 2.30 percent and Portugal’s declined 21 basis points to 3.29 percent.
Currencies perceived as havens were among the biggest losers versus the 19-nation euro. The Swiss franc weakened 2.9 percent to 98.47 centimes per euro and the yen slipped 0.9 percent to 133.18 per euro.
The Stoxx 600 advanced for an eighth day, capping its longest rally since April. Among companies moving on corporate news, Aer Lingus Group Plc added 1.6 percent and International Consolidated Airlines Group SA climbed 0.9 percent as the Irish carrier is mulling IAG’s takeover offer. Delhaize Group, the owner of the U.S. Food Lion stores, advanced 7.1 percent after reporting that preliminary underlying operating profit for 2014 was better than estimated.
The MSCI Emerging Markets Index fell for the first time in five days, declining 0.2 percent from an eight-week high.
Russia’s Micex Index slid 1.8 percent and the ruble weakened 7.1 percent following its first weekly advance this year. The dollar-denominated RTS slumped 4.8 percent.
Ruble losses accelerated after S&P lowered Russia’s credit rating to junk. The ratings agency also assigned the sovereign debt a negative outlook.
The U.S. and the European Union warned that Russia may face further repercussions after a rocket attack on the port city of Mariupol on Saturday. The U.S., NATO, and the OSCE said the attack came from rebel-held territory and the separatists blamed Ukrainian government forces.
President Barack Obama said the alliance of the U.S. and European governments must remain unified and EU foreign affairs chief Federica Mogherini called an extraordinary meeting of foreign ministers for Jan. 29. Russia consistently denies military involvement.
A new convoy of trucks carrying what Russia says is humanitarian aid will head for eastern Ukraine early on Jan. 27, RIA Novosti reported, citing the Emergencies Ministry in Moscow. Ukrainian troops faced 115 rebel attacks in the past 24 hours, military spokesman Leonid Matyukhin said on Facebook.
The Dubai Financial Market Index slid 3.6 percent, the most this year, and Abu Dhabi’s benchmark gauge lost 0.8 percent. Saudi Arabia’s Tadawul All Share Index rose 0.7 percent trading resumed following the death of King Abdullah on Jan. 23.
The Shanghai Composite Index climbed 0.9 percent to the highest close since August 2009, with trading volumes 23 percent less than the 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.3 percent, ending a four-day rally.
Commodities have fallen 3.6 percent this month, heading for their first January decline in five years amid surging supplies of crude oil and slowing global economic growth.
Copper gained 1.1 percent in London after sliding more than 3 percent to the weakest level since July 2009. Silver declined 2.3 percent.