By Whitney Kisling and Jeff Sutherland - Dec 24, 2011 4:20 AM GMT+0700
Dec. 23 (Bloomberg) -- U.S. consumer spending rose less than forecast in November as wages declined for the first time in three months. Purchases rose 0.1 percent, Commerce Department figures showed today in Washington. Incomes also grew 0.1 percent, the weakest in three months. Meanwhile, orders for U.S. durable goods rose 3.8 percent in November after no change in the prior month. Michael McKee and Lisa Murphy report on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Dec. 23 (Bloomberg) -- Bloomberg's Cali Carlin reports on the performance of the U.S. equity market today. U.S. stocks rose, pushing the Standard & Poor’s 500 Index to a 0.6 percent yearly rally, as expansion in U.S. industrial purchases and stronger new-home sales offset weaker-than-forecast consumer spending. Michael McKee also speaks. (Source: Bloomberg)
U.S. stocks rose, erasing the 2011 decline for the Standard & Poor’s 500 Index, amid further signs of strength in the world’s largest economy. Treasuries declined while commodities advanced.
The S&P 500 added 0.9 percent to 1,265.33 at 4 p.m. New York time. The Dow Jones Industrial Average jumped 1 percent to 12,294, the highest level since July 27. The MSCI All-Country World Index advanced 0.8 percent, rising for a fourth straight day. Copper rallied 1.6 percent and crude oil briefly topped $100 a barrel. Yields on 30-year Treasuries climbed eight basis points and increased the most in a week since October.
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. Sales of new U.S. homes rose in November to a seven-month high. 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.”
Erasing 2011 Drop
A four-day rally (SPX) in the S&P 500 erased the index’s decline for the year, giving it a 0.6 percent gain for 2011. The gauge jumped 3.7 percent this week 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.
Wall Street strategists forecast the S&P 500 will end the year at 1,278, or 1 percent higher than today’s close. With four trading days left in 2011, the benchmark index for U.S. equities would need to climb about 0.2 percent each day to reach their projection. On average, the S&P 500 gains 1 percent in the last four days of the year, according to data dating back to 1928 compiled by Bloomberg.
All 10 industries in the S&P 500 advanced at least 0.6 percent today, led by consumer-discretionary stocks, technology and raw materials companies. Verizon Communications Inc. (VZ) advanced 1.8 percent. Walt Disney Co. (DIS) and Bank of America Corp. (BAC) rose at least 2 percent, pacing gains among the largest companies. U.S. markets will be closed Dec. 26 for the Christmas holiday.
Durable Goods
U.S. stocks rose as orders for goods meant to last at least three months rose 3.8 percent in November, as an increase in demand for aircraft outweighed declines in spending on computers and equipment. A separate report showed purchases of single- family properties increased 1.6 percent to a 315,000 annual pace, adding to evidence of stability in the housing market. Consumer spending rose less than forecast in November as wages declined for the first time in three months.
Equities maintained 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.
“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.”
European Stocks
The Stoxx Europe 600 Index rose 0.9 percent, taking its weekly advance to 3.5 percent. Wavin (WAVIN) NV jumped 22 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.
Yields on 30-year Treasury bonds climbed to 3.06 percent today. Ten-year yields increased eight basis points to 2.03 percent, and touched the highest level in more than a week.
The S&P GSCI index of 24 commodities advanced 0.1 percent, the fifth consecutive gain. Crude oil climbed 0.2 percent to $99.68, capping its biggest weekly gain in two months. Futures rallied 6.6 percent over the past five days.
Copper rose to the highest level in more than a week, to $3.4695 a pound, as improved economic data in the U.S. spurred optimism that demand for industrial metals will grow. Gold fell for a third straight day, dropping 0.3 percent, on speculation that a stronger dollar will curb demand for the metal as an alternative asset.
The U.S. Dollar Index rose 0.1 percent as a slower-than- expected expansion of France’s gross national product fueled concern that the European economy is stalling. The euro weakened against most of its major peers. The currency lost 0.1 percent to $1.3042.
To contact the reporters on this story: Whitney Kisling in New York at wkisling@bloomberg.net; Jeff Sutherland in New York at jsutherlan13@bloomberg.net
To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net
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