By Nick Baker and Rita Nazareth - Dec 23, 2011 4:11 AM GMT+0700
U.S. stocks (SENSEX) rose, extending the Standard & Poor’s 500 Index’s third weekly gain in December, as European equities rallied after American jobless claims and consumer confidence were better than expected. The dollar fluctuated against the euro and 10-year Treasuries advanced.
The S&P 500 (SPXL1) added 0.8 percent to 1,254 at 4 p.m. New York time as the Dow Jones Industrial Average rallied 61.91 points, or 0.5 percent, to 12,169.65. The Stoxx Europe 600 Index advanced 1.1 percent. The euro climbed less than 0.1 percent to $1.3049 after rising 0.6 percent. Yields on 10-year Treasuries dropped one basis point to 1.95 percent. Oil futures rose 0.9 percent, a fourth straight increase.
Equities juumped after the number of Americans applying for unemployment benefits decreased to 364,000, the fewest since April 2008, while the Thomson Reuters/University of Michigan index of consumer sentiment topped the median economist forecast and climbed to a six-month high. The dollar and Treasuries rose after U.S. gross domestic product expanded at a 1.8 percent rate in the third quarter, slower than the 2 percent median growth projection in a Bloomberg survey.
“We’re definitely muddling through in the U.S.,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “It may not be a bullish case, but the jobs situation is less grim than it was. You still have to be wary that a significant recession in Europe could pull the rest of the world into a global recession, including the U.S.”
Weekly Gain
The S&P 500 has rallied 2.8 percent this week after reports showed U.S. housing starts topped economists’ projections and German business confidence unexpectedly grew. The gauge has trimmed this year’s decline to 0.2 percent. It is still down 8 percent from this year’s high in April, joining a global rout in equities, as concern about Europe’s debt crisis overshadowed better-than-estimated American economic data.
Financial (S5FINL) shares rose the most in the S&P 500 among 10 industries today as Morgan Stanley, Citigroup Inc. and Bank of America Corp. jumped more than 4.5 percent. General Electric Co. and Sears Holdings Corp. added at least 2 percent, pacing gains among companies most-tied to economic growth. Akamai Technologies Inc. (AKAM) surged 19 percent after agreeing to buy Cotendo to expand Internet-based and mobile services.
Treasury Yields
Treasury 30-year bonds rose for the first time in three days after yields had the biggest back-to-back daily gains since October. Bonds remained higher after data showed the U.S. economy grew less in the third quarter than previously estimated. The Federal Reserve made its final 2011 purchase of Treasuries in an eight-month program to lower borrowing costs.
Yields on the 30-year bonds fell two basis points, or 0.02 percentage point, to 2.99 percent.
The yen fell against most of its major peers as stock markets climbed amid reduced demand for haven assets and signs U.S. employment is strengthening.
Crude oil rose to $99.53, after climbing above $100 a barrel for the first time in a week. Gold fell 0.2 percent to $1,610.60 an ounce on the Comex in New York.
Hungary (BUX)’s benchmark BUX Index of stocks slid 0.8 percent. S&P downgraded the country to BB+ from BBB- yesterday, removing its investment-grade ranking. The International Monetary Fund and the European Union suspended talks over an aid package to Hungary last week on concern that the government’s plans for a central bank law may curb monetary-policy independence.
The BSE India Sensitive Index of stocks rose 0.8 percent, rebounding from a decline. South Korea’s won depreciated versus all 16 of its most-traded peers monitored by Bloomberg.
To contact the reporters on this story: Nick Baker in New York at nbaker7@bloomberg.net; Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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