Stocks Advance With Dollar as Treasuries Retreat on U.S. Employment Growth

By Rita Nazareth and Allison Bennett - Mar 9, 2012 9:37 PM GMT+0700

Stocks and the dollar gained, while Treasuries retreated, after stronger-than-forecast growth in U.S. payrolls bolstered optimism in the world’s largest economy. The euro weakened as Greece said it triggered an option compelling investors to take part in its debt swap.

The Standard & Poor’s 500 Index increased 0.1 percent at 9:35 a.m. in New York. The euro depreciated 1.1 percent to $1.3127. The yield on the 10-year Treasury rose one basis point to 2.03 percent. Italy’s 10-year bond yield increased three basis points to 4.83 percent, erasing earlier declines. Copper rose 0.2 percent, while oil was little changed.

Enlarge image

Traders work at the New York Stock Exchange (NYSE) in New York. Photographer: Scott Eells/Bloomberg

U.S. payrolls increased by 227,000, following a revised 284,000 gain in January that was bigger than first estimated, the Labor Department said. The median projection of economists in a Bloomberg News survey called for a 210,000 rise. The Greek government said it reached its target in the biggest sovereign restructuring in history, with a 95.7 percent participation rate among investors after it received approval to activate collective action clauses.

“We can sit back because the U.S. is not going into a recession even though Europe is in a recession,” Stephen Wood, the New York-based chief market strategist for Russell Investments, said in a telephone interview. His firm oversees $137.6 billion. “These jobs numbers are not fantastic, but they are consistent with that slow, non-recessionary economic growth forecast.”

Bull Market Anniversary

Today is the three-year anniversary of the bull market in U.S. stocks that followed the global financial crisis. The S&P 500 has rallied 102 percent from its 12-year low on March 9, 2009, while the MSCI All-Country World Index jumped 91 percent.

The dollar strengthened against 11 of 16 major peers, rising more than 1 percent versus the currencies of Norway, Sweden and Denmark. Today’s jobs data fueled speculation that the American economy is improving enough that the Federal Reserve will not see a need to undertake a third round of bound purchases known as quantitative easing, or QE3.

“It’s good news for the U.S. economy, arguably good enough news that prospects of QE3 start to become much more remote,” said Greg Anderson, a senior currency strategist at Citigroup Inc. in New York. “The knee-jerk dollar strength was across the board but for risk-on currencies I expect them to regain a little bit of footing.”

European Stocks

Three shares rose for every two that declined in the Stoxx 600 (SXXP). London Stock Exchange Group Plc rallied 7.4 percent, the most since June, after agreeing to buy a majority stake in LCH.Clearnet Group Ltd. for 463 million euros ($612 million). Lagardere SCA, France’s largest publisher, tumbled 7 percent after its 2012 outlook prompted analysts to cut profit targets.

The euro depreciated 0.3 percent against the yen and fell 0.3 percent versus the pound. The Dollar Index climbed 0.9 percent, with the U.S. currency appreciating 0.3 percent against the yen.

Greek government bonds due in February 2023 to be issued after the nation’s debt swap is completed were bid at a price of 25.25 cents on the euro, according to Commerzbank AG data on Bloomberg. The securities were offered at 26 cents, according to Jefferies Group Inc. The 2 percent bond had a bid yield of 19.84 percent and an offer rate of 19.42 percent, the data showed.

The MSCI Emerging Markets Index (MXEF) advanced 0.7 percent, paring this week’s drop to 1.8 percent. The Shanghai Composite (SHCOMP) and the Hang Seng China Enterprises Index (HSCEI) of Chinese stocks listed in Hong Kong both advanced 0.8 percent after a report showed consumer prices rose at the slowest pace in almost two years. The BUX Index (BUX) jumped 1 percent in Budapest. The BSE India Sensitive Index (SENSEX) rose 2.1 percent as trading resumed after yesterday’s holiday.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net

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