U.S. Stocks Add to Eight-Week High as Dollar Gains, Bonds Slip

  • S&P 500 caps third week of gains as GE rallies to 7-year high
  • Chinese, European shares advance to continue advances

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U.S. shares rose to extend an eight-week high, adding to gains in European and Asian equity markets as a run of weaker-than-estimated economic reports boosted speculation central banks will maintain stimulus measures.

The Standard & Poor’s 500 Index capped a third weekly advance as investors assess corporate results amid a rally that’s added more than $4 trillion to global equities this month. Stocks in Europe rose with bonds amid persistent speculation that the area’s central bank will add to stimulus. The dollar regained ground, damping emerging-market currencies, while Treasuries pared a weekly advance.

The October rally in stocks, briefly interrupted this week, has been accompanied by a pull back in the greenback

Weak economic news has proved positive for equities this month as traders speculate ongoing global uncertainty will stay the Federal Reserve’s hand until 2016 and that policy makers from Europe to Asia will keep or increase monetary stimulus. Chinese stocks have rallied as the government unveiled further reforms of state-run industries.

“You may have no rate hike this year from the Federal Reserve and an extension of stimulus in Europe and in Japan so that’s giving a boost to equities,” said John Plassard, a senior-equity sales trader at Mirabaud Securities in Geneva. “At the same time, crude rebounded, and earnings in the U.S. and Europe were not so bad.”

Stocks

The S&P 500 added 0.5 percent at 4 p.m. in New York. The gauge is up 0.9 percent in the past five days, capping its longest streak of weekly gains since May. The index has surged 5.9 percent in October, poised for its best month since 2011 as it rebounds from a late-summer swoon.

General Electric Co. rose 3.4 percent to a seven-year high after its quarterly results. Honeywell International Inc. slid 2 percent after its revenue missed expectations and the company trimmed its full-year sales forecast. Schlumberger Ltd. lost 3.1 percent after reporting quarterly profit that declined from the previous year.

“Investors are keying in on earnings season, which will really get rolling next week,” said Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion. “It’s been a good week and month to date, which has the S&P back close to even for the year. The numbers are better than how it feels. Other issues, such as China, have quieted down.”

Data Friday showed a drop in factory output as high inventories and lukewarm demand from overseas customers kept American producers bogged down. A separate report indicated consumer sentiment climbed more than forecast in October as lower-income Americans projected wage gains will accelerate and falling energy prices helped stretch paychecks.

The Stoxx Europe 600 Index advanced 0.6 percent to erase its loss for the week.

Emerging Markets

The MSCI Emerging Markets Index rose 0.1 percent, leaving it 0.7 percent higher in its third weekly increase, the longest run of gains in five months. The Malaysian ringgit slid from an eight-week high versus the dollar, leading currencies lower. 

The Hang Seng China Enterprises Index advanced to 0.8 percent in Hong Kong, taking its rise since the end of September to 13 percent. The Shanghai gauge increased 1.6 percent Friday, extending the weekly gain to 6.5 percent. 

Brazil’s Ibovespa rose 1 percent to trim its weekly slide to 3.5 percent, with the nation missing out on a rally in emerging markets, as Goldman Sachs Group Inc. predicted Latin America’s largest economy will face more challenges.

The nation’s currency tumbled on speculation Finance Minister Joaquim Levy is preparing to resign. The real lost as much as 3.7 percent on the reports.

Commodities

West Texas Intermediate crude climbed for the first time in five days on speculation that the falling number of rigs drilling for oil in the U.S. will further curb output. Futures added 1.9 percent to settle at $47.26 a barrel, trimming a weekly slide of 4.8 percent, the most since August. Brent for December settlement added 1.5 percent to end at $50.46 a barrel.

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Copper prices fell, posting the first weekly loss this month, amid mounting concerns of a slowdown in consumption by China. Futures slid 0.8 percent to settle at $2.4035 a pound in New York, leaving prices down 0.4 percent in the week.

Coffee futures fell the most in seven months after Colombia announced measures that will increase exports, spurred by the plight of farmers in the country who are dealing with drought conditions

Currencies

The Bloomberg Dollar Spot Index, a gauge of the U.S. currency against 10 major peers, climbed 0.3 percent in a second day of gains, paring its drop in the week to 0.4 percent.

The euro slipped 0.3 percent to $1.1357, while the yen fell 0.5 percent to 119.50 per dollar, paring its weekly gain to 0.7 percent.

The Australian dollar led a pullback in major currencies versus the greenback, slipping 0.8 percent. New Zealand’s dollar retreated from a more than three-month high, losing 0.7 percent to 68.02 U.S. cents.

Bonds

Treasuries slipped, trimming a weekly gain amid signals of a cooling economy that have led traders to trim expectations for a Federal Reserve interest-rate increase in 2015. The yield on U.S. 10-year Treasuries was little changed at 2.03 percent, down six basis points from Oct. 9.

European bonds advanced, with Spanish, Italian and German securities extending weekly gains. The region’s central bank is due to meet next week amid speculation it may expand its stimulus measures to support the economy.

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