Stocks in U.S. Gain on Economic Data as European Shares, Euro Pare Losses

By Stephen Kirkland and Rita Nazareth - Feb 16, 2012 10:47 PM GMT+0700
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Trader Michael Capolino, right, and specialist Anthony Majestic, left, at the New York Stock Exchange. Photographer: David Karp/AP

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Feb. 16 (Bloomberg) -- Ken Adams, who helps oversee 140 billion pounds ($219 billion) as head of global strategy at Scottish Widows Investment Partnership, discusses asset allocation strategy. He talks from Edinburgh with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)

U.S. stocks rose, rebounding from a two-day drop in the Standard & Poor’s 500 Index, as data on jobless claims, housing starts and manufacturing bolstered optimism in the world’s largest economy. European shares and the euro pared losses triggered by concern over Greece.

The Standard & Poor’s 500 Index advanced 0.4 percent to 1,348.28 at 10:44 a.m. in New York. The Stoxx Europe 600 Index lost 0.1 percent after tumbling as much as 1.1 percent. The euro was down 0.1 percent at $1.3052 after dipping below $1.30 earlier for the first time since Jan. 25. The S&P GSCI gauge of 24 commodities was little changed. Ten-year Treasury yields increased three basis points to 1.96 percent.

U.S. equities halted a global slump as jobless claims slid to a four-year low while housing starts and the Federal Reserve Bank of Philadelphia’s economic index topped forecasts. Europe’s creditor countries struggled to bridge divisions over a rescue of Greece yesterday, delaying a decision on 130 billion euros ($170 billion) of aid until Feb. 20. Ratings for global banks may be cut as lenders face risks of rising funding costs amid Europe’s debt woes, Moody’s Investors Service said.

“We’re more important to Europe than Europe is to us,” Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp., said in a telephone interview. Her firm has $1.68 trillion in client assets. “U.S. economic numbers have been much better than expected. I’m pretty optimistic, but I don’t think we’re going to boom. The debt overhang puts a lid on how fast the U.S. economy can grow.”

Dow Leaders

Microsoft Corp., American Express Co. and Hewlett-Packard Co. rose more than 1 percent for the biggest gains in the Dow Jones Industrial Average. (INDU) Nine of the 10 main industry groups in the S&P 500 advanced.

General Motors Co. (GM) rallied 4.3 percent after posting full- year earnings of $9.19 billion, the largest profit in its 103- year history.

Applications for jobless benefits decreased by 13,000 last week to 348,000, less than the lowest forecast in a Bloomberg survey of economists and the fewest since March 2008. The Philadelphia Fed’s general economic index increased to 10.2, topping the median economist forecast for a reading of 9. Housing starts increased 1.5 percent to a 699,000 annual rate and building permits increased. The Bloomberg Consumer Comfort Index increased to the highest level in a year.

European Stocks

Almost two shares declined for each that rose in the Stoxx 600. Spanish banks led losses as regulators lifted a six-month ban on short-selling the nation’s lenders. Banco Santander SA lost 2.5 percent, the most in six weeks. Banco Bilbao Vizcaya Argentaria SA and Bankia SA retreated more than 4.5 percent.

Ratings for UBS AG, Credit Suisse Group AG and Morgan Stanley may be lowered by as many as three levels, while those for Goldman Sachs Group Inc. (GS), Deutsche Bank AG, JPMorgan Chase & Co. and Citigroup Inc. may be cut two levels, Moody’s said in a statement.

The euro slipped 0.2 percent to $1.3046. The Dollar Index, which tracks the U.S. currency against six trading partners, rose 0.1 percent.

Italian 10-year bond yields decreased five basis points to 5.69 percent and Spain’s yields lost 11 basis points to 5.33 percent. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose for a seventh day, its longest run of increases since November 2010. The gauge climbed six basis points to 351, the highest since Jan. 18.

Yield Spread

The difference in yield investors demand to own Spain’s 10- year bonds compared with Germany benchmark bunds decreased 13 basis points after rising earlier. Spain sold 4.07 billion euros of debt maturing in 2015 and 2019, more than the 4 billion-euro maximum target. The yield spread between French bonds and the bund decreased five basis points. France sold 8.45 billion euros of debt at lower borrowing costs.

The MSCI Emerging Markets Index (MXEF) fell 1.1 percent, erasing most of yesterday’s gain. Taiwan’s Taiex index and South Korea’s Kospi Index lost at least 1.4 percent. Catcher Technology Co. (2474) and Foxconn Technology Co., which make casings for Apple Inc.’s iPhones, slumped more than 6 percent in Taipei after Apple shares lost 2.3 percent yesterday. The Shanghai Composite Index (SHCOMP) retreated 0.4 percent.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net