Bloomberg News

U.S. Stocks Rebound, Commodities Rise as Dollar Slips Before Fed

November 02, 2011

Nov. 2 (Bloomberg) -- U.S. stocks rebounded from a two-day slump and commodities rose, while the dollar and Treasuries fell, as a report showed American payrolls grew more than forecast and investors awaited the Federal Reserve’s statement on the economy. The euro strengthened.

The Standard & Poor’s 500 Index climbed 1.3 percent to 1,233.61 at 9:57 a.m. in New York. The Stoxx Europe 600 Index rose 0.1 percent. The Dollar Index slid 0.5 percent, snapping a three-day advance. Treasury 10-year yields advanced five basis points to 2.04 percent, the first increase in four days. The euro appreciated against 14 of its 16 major peers as European leaders prepared to ratchet up pressure on Greece to accept a bailout. Copper halted a two-day retreat.

U.S. companies added 110,000 workers in October, according to ADP Employer Services, and economists surveyed by Bloomberg forecast the Fed is probably engineering a third round of asset purchases to bolster growth, even as a decision is unlikely to be announced today. European leaders plan to hold emergency talks with Greek Prime Minister George Papandreou in Cannes, France, on the eve of a Group of 20 summit. French President Nicolas Sarkozy said yesterday the “only way” to repair Greek finances is through the deal hammered out last week.

“The dollar is softening into the meeting on talk of” quantitative easing, said Jane Foley, a senior currency strategist at Rabobank International in London. “That may be premature. We’ve had a glimmer of hope or optimism on the Greek situation,” which supports the euro, she said.

The S&P 500 fell 5.2 percent during the first two days of the week after Papandreou planned a referendum to allow voters to decide if Greece should accept the bailout, spurring concern the rescue would be rejected and the nation would default on its debt.

Sixty-nine percent of economists surveyed by Bloomberg say Fed Chairman Ben S. Bernanke will start a third round of quantitative easing, or QE3, with 36 percent predicting the move in the first quarter of next year, according to a poll of 42 economists from Oct. 26-31.

Financial companies and energy and commodity producers led gains among all 10 of the main industry groups in the S&P 500 today, with Citigroup Inc., DuPont Co. and Exxon Mobil Corp. pacing the advance. All but one of the 81 stocks in the S&P 500 Financials Index advanced. Bank of America Corp. and Goldman Sachs Group Inc. climbed more than 3 percent, rebounding from plunges of at least 5.5 percent yesterday.

Adding Workers

The Stoxx 600 pared this week’s drop to 5.3 percent as basic-resource producers, auto companies and insurers led gains. Logica Plc sank 8.7 percent in London as the Anglo-Dutch computer services provider cut its sales-growth forecast.

Benchmark indexes in Italy, France and Germany rose at least 0.6 percent, rebounding from plunges of more than 5 percent yesterday.

The euro strengthened 0.7 percent to $1.3803. The shared currency recovered after earlier paring gains as the European Financial Stability Facility said it will delay a planned 3 billion-euro ($4.1 billion) bond sale because of market conditions. The dollar weakened against 12 of 16 major peers, losing 0.4 percent to 78.05 yen.

Bund Yields

German bund yields were eight basis points higher at 1.85 percent after dropping 26 basis points yesterday, the biggest decline since Bloomberg began collecting the data in 1992. Greek two-year yields rose as much as 660 basis points to a record 93.88 percent.

Germany sold 4 billion euros of five-year notes at a record-low yield of 1 percent, and Portugal raised 1.2 billion euros in a sale of three-month bills.

Copper climbed 2.3 percent as inventories of the metal in warehouses monitored by the London Metal Exchange dropped for a 10th consecutive day, the longest decline since July 6. New York oil rose 0.8 percent to $92.93 a barrel, the first gain in four days.

The MSCI Emerging Markets Index rose 0.8 percent, following its worst two-day decline in a month. The Hang Seng China Enterprises Index climbed 2.6 percent in Hong Kong. Russia’s Micex Index advanced 1.3 percent.

--With assistance from Shiyin Chen in Singapore and Matthew Brown, Claudia Carpenter and Jason Webb in London. Editor: Michael P. Regan

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net


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