Stocks Advance for Fourth Day on U.S. Recovery

By Andrew Rummer and Whitney Kisling - Dec 23, 2011 10:46 PM GMT+0700

U.S. stocks rose, extending a weekly advance, and Treasuries declined amid further signs of strength in the world’s largest economy. Commodities climbed as oil headed for the biggest weekly gain in almost two months.

The Standard & Poor’s 500 Index added 0.3 percent at 10:45 a.m. New York time. The MSCI All-Country World Index advanced 0.5 percent, set for the longest winning streak since Dec. 5. Copper increased 1.6 percent and oil in New York approached $100 a barrel. Yields on 10-year Treasuries climbed seven basis points, heading for the biggest weekly increase in two months. The dollar advanced against the euro, erasing an earlier loss.

Orders for U.S. durable goods jumped in November by the most in four months, data showed today, helping to offset weaker-than-forecast consumer spending. The U.S. Congress passed a two-month payroll tax cut extension a day after House Republicans surrendered on whether to endorse the measure days before its scheduled Dec. 31 expiration.

“The market’s holding up,” Paul Zemsky, the New York- based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $550 billion. “It’s important to take it all with the totality of the week, we had fantastic data on housing and jobs earlier this week, so overall, this data is weak, but the jobless claims trumps it because it’s more forward-looking.”

Economic Data

A three-day rally in the S&P 500 trimmed the index’s decline for the year to 0.3 percent. The gauge rose 2.8 percent this week through yesterday after data on employment, consumer confidence, housing starts and leading economic indicators added to expectations that the U.S. economy can weather Europe’s debt crisis.

Orders for U.S. durable goods climbed in November by the most in four months, data from the Commerce Department showed today in Washington. Bookings for equipment meant to last at least three years rose 3.8 percent after no change in prior month that was previously reported as a decline.

A separate report showed sales of new U.S. homes rose in November to a seven-month high, adding to evidence of stabilization in the housing market. Stock futures pared earlier gains as consumer spending rose less than forecast in November as wages declined for the first time in three months.

Equities briefly extended gains after Congress extended a two-percentage-point payroll tax cut, following a month of wrangling among lawmakers. The measure will continue expanded unemployment benefits and head off a reduction in Medicare payments to doctors through February. Lawmakers plan to negotiate on a longer-term extension in the new year.

‘Domestic Threat’

“That removes probably the biggest domestic threat to the economy in 2012,” David Kelly, who helps oversee $394 billion as chief market strategist for JPMorgan Funds in New York, said in a telephone interview. “As the year ends, some of the extremes in uncertainty are diminishing, and that should allow the market to go up.”

Wall Street strategists forecast the S&P 500 will end the year at 1,278, or 1.9 percent higher than yesterday’s close. With five trading days left in 2011, the benchmark index for U.S. equities would need to climb about 0.4 percent each day to reach their average target. On average, the S&P 500 gains 1.2 percent in the last five days of the year, according to data dating back to 1928 compiled by Bloomberg.

The Stoxx Europe 600 Index rose 0.7 percent, taking its weekly advance to 3.3 percent. Wavin (WAVIN) NV jumped 21 percent as Mexichem SAB, a Latin American chemical maker, raised its takeover bid for the Dutch manufacturer to 10 euros a share. The London and Dublin markets closed early today. The Tokyo exchange was shut for the Emperor’s Birthday holiday.

The S&P GSCI index of 24 commodities advanced 0.2 percent, the fifth consecutive gain. Crude oil climbed 0.2 percent in New York.

To contact the reporters on this story: Andrew Rummer in London at arummer@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net