By Michael P. Regan and Rita Nazareth - Apr 12, 2012 3:22 AM GMT+0700
U.S. equities halted the longest slump of the year and European stocks rebounded from a two-month low as Alcoa (AA) Inc. opened the earnings season with an unexpected profit. Spanish bonds rose as a European Central Bank official signaled the ECB may revive its bond-purchase program.
The Standard & Poor’s 500 Index added 0.7 percent to close at 1,368.71, snapping a five-day slump. The Dow Jones Industrial Average climbed 89.46 points as Alcoa rallied 6.2 percent. The Stoxx Europe 600 Index (SXXP) rose 0.7 percent. The euro ended a five- day drop against the yen, while yields on Spanish and Italian 10-year debt dropped at least 10 basis points. Oil helped lead commodities higher as U.S. stockpiles of gasoline and distillate fuels declined, while natural gas tumbled below $2 per million British thermal units for first time since January 2002.
Prime Minister Mariano Rajoy said Spain’s future is at stake in its battle to tame surging bond yields. Photographer: Jock Fistick/Bloomberg
April 11 (Bloomberg) -- Jim Bianco, president of Bianco Research LLC, and Michael Gayed, chief investment strategist at Pension Partners LLC, talk about the outlook for the U.S. stock market. They speak with Stephanie Ruhle and Adam Johnson on Bloomberg Television's "Street Smart." Gary Shilling of A. Gary Shilling & Co. also speaks. (Gary Shilling is a Bloomberg View columnist. The opinions expressed are his own. Source: Bloomberg)
April 11 (Bloomberg) -- Todd Schoenberger, managing principal at BlackBay Group, and Bloomberg's Josh Lipton talk about the impact of the Federal Reserve's Beige Book business survey on the U.S. stock market today and the outlook for equities, corporate earnings and the economy. They speak with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
April 11 (Bloomberg) -- Steven Major, global head of fixed-income research at HSBC Holdings Plc, Paul Donovan, deputy head of global economics at UBS AG, and Bill Blain, co-head of the Special Situations Group at Newedge Group Ltd., discuss the outlook for Spanish bonds. This report also contains comments from Spanish Prime Minister Mariano Rajoy and Johannes Jooste, a strategist at Bank of America Corp.'s Merrill Lynch Wealth Management. (Source: Bloomberg)
April 11 (Bloomberg) -- Timothy Moe, a Hong Kong-based strategist at Goldman Sachs Group Inc., talks about the outlook for Asia stocks Stocks in Asia slipped, with the region’s benchmark index falling for a sixth day, as Spanish bond yields surged closer to levels that prompted Greece, Ireland and Portugal to seek European bailouts. Moe speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
April 11 (Bloomberg) -- Peter Garnry, an equity strategist at Saxo Bank A/S, discusses Alcoa Inc.'s unexpected first-quarter profit reported yesterday, investment strategy for European equities and recommendation of Rolls-Royce Holdings Plc. He speaks from Hellerup, Denmark, with Caroline Hyde on Bloomberg Television's "Countdown." (Source: Bloomberg)
April 11 (Bloomberg) -- Pelham Smithers, managing director of Pelham Smithers Associates, talks about the outlook for Sony Corp. and Sharp Corp. Sony and Sharp posted losses that together equaled 900 billion-yen ($11 billion) as the first decline in global TV shipments in six years and a stronger yen hurt overseas sales for Japan’s biggest LCD TV makers. Smithers speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
April 11 (Bloomberg) -- Robert Hagstrom, a portfolio manager at Legg Mason Capital Management, talks about the performance of the equity market and investor sentiment. Hagstrom speaks with Betty Liu, Josh Lipton and Dominic Chu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
April 11 (Bloomberg) -- Bloomberg’s Stephanie Ruhle, Adam Johnson and Alix Steel report on today’s ten most important stocks including Nike, Apple and Alcoa. (Source: Bloomberg)
Australian one-dollar coins sit with a collection of bank notes arranged for a photograph, in Sydney, Australia. Photographer: Sergio Dionisio/Bloomberg
Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Haruyoshi Yamaguchi/Bloomberg
The S&P 500 slid 4.3 percent in the previous five sessions as $2 trillion was erased from global equities amid concern Europe’s debt crisis was worsening and weaker-than-forecast U.S. jobs growth. Today’s rebound came as Alcoa’s results boosted optimism at the start of the first-quarter earnings-reporting season, while ECB board member Benoit Coeure spurred speculation the central bank will help reduce Spain’s borrowing costs after 10-year yields touched 6 percent for the first time this year.
“The environment is still very positive for stocks,” Robert Hagstrom, fund manager at Legg Mason Capital Management Inc., said on Bloomberg Television’s “In the Loop” program. Legg Mason manages about $638 billion. Bull markets “need corrections, need a pullback, in order to be sustainable. We think about that all the time. Until we actually go through it,” he said. Then “it’s the risk-off traders, or Chicken Little, maybe, that the world is coming to an end. But it’s not coming to an end.”
‘Modest to Moderate’
U.S. equities held onto gains after the Federal Reserve said the economy maintained its expansion in all 12 of its regions as manufacturing, hiring and retail sales showed signs of strength in the face of higher fuel prices.
“The economy continued to expand at a modest to moderate pace from mid-February through late March,” the Fed said today in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy. “Hiring was steady or showed a modest increase across many districts.”
Slump Halted
The S&P 500 ended its longest losing streak since November as financial, consumer-discretionary, telephone and industrial stocks led gains in all 10 of the index’s main industries. Alcoa, Bank of America Corp., JPMorgan and Cisco Systems Inc. rose more than 2 percent to lead the Dow (INDU) higher.
Alcoa marked the unofficial start of an earnings season by reporting a profit of $94 million, or 9 cents a share, after orders rose and the largest U.S. aluminum producer closed higher-cost smelting capacity. Profit excluding restructuring costs and other items was 10 cents a share, compared with the average analyst estimate for a loss of 4 cents.
Analysts project profit growth slowed to 0.8 percent in the first quarter. Google Inc. (GOOG) is scheduled to report results tomorrow after the close of trading, while JPMorgan Chase & Co. and Wells Fargo & Co. will release earnings on April 13.
A rally in Alcoa shares following earnings has foreshadowed gains for the S&P 500 in the past, according to Ryan Detrick at Schaeffer’s Investment Research. Since 2005, the benchmark gauge has risen an average 4 percent in the three-month period that followed a positive reaction to earnings from Alcoa, which is typically the first company in the Dow to report results.
‘Positive Catalyst’
“This earnings season could be a major positive catalyst,” Detrick, senior technical strategist at Schaeffer’s, said in a telephone interview from Cincinnati. “We’ve had a strong selloff ahead of it. Should earnings come in slightly better than expected, that could turn out to be one of those buying opportunities.”
UniCredit SpA (UCG) and Intesa Sanpaolo SpA, Italy’s biggest banks, led a rebound in financial shares, advancing more than 5.4 percent. CGGVeritas SA (GA), the world’s largest seismic surveyor of oil fields, climbed 4.5 percent after saying it boosted vessel production in the first quarter. Givaudan SA, a Swiss maker of flavors and fragrances, gained 3.7 percent as sales increased.
Six countries in Europe sold debt today, with Italy meeting its target and Germany receiving bids for less than its maximum objective.
Germany’s 10-year bund fell, with the yield rising 14 basis points to 1.78 percent. The 10-year Italian bond yield fell 15 basis points to 5.53 percent, while the 10-year Spanish bond yield declined 10 basis points to 5.88 percent. The euro strengthened 0.5 percent to 106.07 yen and gained 0.2 percent to $1.3108.
The yield on the 10-year U.K. gilt increased four basis points to 2.05 percent after its debt agency sold 4.5 billion pounds ($7.2 billion) of September 2017 securities.
Commodities Gain
Lead and aluminum climbed more than 1.6 percent to lead gains in 17 of 24 commodities tracked by the S&P GSCI. Oil increased 1.7 percent to $102.70 a barrel, rebounding from an almost two-month low. Natural gas dropped as low as $1.976 per million British thermal units for the first time in more than 10 years on speculation there won’t be enough weather-driven demand for the fuel in coming weeks to reduce an inventory surplus.
The MSCI Emerging Markets Index (MXEF) slipped 0.1 percent, falling for a sixth straight day and reaching the lowest level since Jan. 30.
The Hang Seng China Enterprises Index (HSCEI) fell 0.9 percent, its third straight decline. The Shanghai Composite Index (SHCOMP) gained 0.1 percent, while benchmark indexes in the Czech Republic and Turkey rallied more than 1 percent.
To contact the reporters on this story: Michael P. Regan in New York at mregan12@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
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