U.S. Stocks Rise as Commodity Prices Advance, Dollar Weakens
U.S. stocks rose after manufacturing in the New York area grew at the fastest pace in four months and Barclays Plc’s earnings topped estimates. Gold, copper and oil rallied more than 1.5 percent as the dollar weakened.
Newmont Mining Corp. and Alcoa Inc. advanced at least 1.5 percent. JPMorgan Chase & Co. and Citigroup Inc. climbed after earnings at Barclays, the U.K.’s second-largest bank, were boosted by investment banking and the sale of a fund-management unit. The Treasury yield curve approached the widest on record as European leaders urged Greece to control its budget deficit, feeding demand for the relative safety of short-term securities.
The Standard & Poor’s 500 Index increased 0.9 percent to 1,084.68 as of 9:35 a.m. in New York, adding to gains from its first weekly advance in more than a month. The Dow Jones Industrial Average climbed 69.76 points, or 0.7 percent to 10,168.9.
“The drivers today are the earnings numbers, which on balance are better than expected, and the New York manufacturing report, which was certainly better than expected,” said Hugh Johnson, who manages more than $1.7 billion as chairman and chief investment of officer of Albany, New York-based Johnson Illington. “What is going to make the difference in 2010 is that earnings and economic numbers come in better than expected. Today is a really good example of that.”
The S&P 500 rose 0.9 percent last week, cutting its 2010 retreat to 3.6 percent, after European officials pledged to help Greece close its budget deficit and the U.S. economy gained momentum, overshadowing China’s actions to limit inflation. The measure has recouped about half of its declines since Feb. 4 when concern about growing budget gaps in Greece, Portugal and Spain spurred the biggest sell-off since April. U.S. markets were closed yesterday.
The difference in yield between two- and 10-year notes widened to 2.89 percentage points today, near the high of 2.90 percentage points reached Jan. 11. The Dollar Index, which gauges the currency against six major U.S. trading partners, slipped 0.2 percent. Oil and metal prices rallied as the dollar weakened, bolstering demand for commodities as an alternative investment.
A record nine-quarter earnings slump is projected by analysts to have ended in the fourth quarter with an 80 percent increase in S&P 500 profits. Forty-five companies in the index are scheduled to release results this week, including Hewlett- Packard Co. and Wal-Mart Stores Inc. More than 350 companies in the S&P 500 have reported fourth-quarter earnings since Jan. 11, and about 76 percent have beaten analysts’ estimates, according to data compiled by Bloomberg.
Manufacturing in the New York region expanded in February at the fastest pace in four months as employment accelerated and sales rose. The Federal Reserve Bank of New York’s general economic index rose to 24.9 this month, higher than anticipated, from 15.9 in January. Readings above zero in the so-called Empire State Index signal growth in the area covering New York and parts of New Jersey and Connecticut.
Newmont Mining, the world’s second-largest gold producer by sales, climbed 2.2 percent to $47.57. Alcoa gained 1.4 percent to $13.47.
General Growth Properties Inc., the second-largest U.S. mall owner, jumped 17 percent to $11. Simon Property Group Inc., the largest U.S. shopping-mall owner, offered to buy General Growth, which filed for bankruptcy last year, for more than $10 billion. Simon Property rose 2 percent to $73.49.
Blackstone Group LP increased 2 percent to $13.08. Dubai International Capital LLC sold two-thirds of its 17 percent holding in Merlin Entertainments Group Ltd. to the Kristiansen family, the founder of Lego A/S, the Financial Times reported without attribution. Blackstone has a 48-percent stake in Merlin Entertainments, the Financial Times said.
JPMorgan Chase & Co. rose 0.8 percent to $39.25. The second-biggest U.S. lender agreed to buy the non-U.S. units of RBS Sempra Commodities LLP for $1.7 billion to expand its energy and metals trading units.
Citigroup gained 1.3 percent to $3.22 and Goldman Sachs Group Inc. rose 0.9 percent to $155.25. Barclays soared 6.7 percent in London trading after saying 2009 profit more than doubled. Net income rose to 9.39 billion pounds ($14.8 billion) from 4.38 billion pounds a year earlier. That beat the 8.78 billion-pound estimate of 14 analysts surveyed by Bloomberg.
Merck & Co., the maker of the Gardasil vaccine, posted fourth-quarter adjusted profit of 79 cents a share. That was more than the 78 cents average of analysts surveyed by Bloomberg. The shares rose 2.1 percent to $37.70.
Oracle Corp. may rise to $32 during the next 12 months as the purchase of Sun Microsystems Inc. boosts its revenue and earnings, Barron’s reported, citing Brendan Barnicle, an analyst at Pacific Crest Securities in Portland, Oregon. The shares gained 0.9 percent to $23.61.
U.S. executives are boosting earnings estimates at the fastest rate in at least eight years just as optimism fades among analysts, a signal that preceded gains for the S&P 500 in the past.
Companies from Kellogg Co. to McKesson Corp. pushed the number of U.S. companies raising forecasts to 10 percent this quarter, while 4.1 percent lowered them. The gap is the widest on record, according to data from Bespoke Investment Group LLC.
At the same time, analysts have cut first-quarter profit projections by 0.2 percent on average in the past month, data compiled by Bloomberg show. The last time companies were raising forecasts at a comparable rate while analysts reined them in was the start of 2004, when the S&P 500 gained 9 percent.