S&P 500 Rises on Housing Data; Oil Falls, Treasuries Advance
February 28, 2012, 7:44 AM ESTBy Stephen Kirkland and Rita Nazareth
Feb. 27 (Bloomberg) -- The Standard & Poor’s 500 Index climbed to an almost four-year high as an increase in American home sales helped halt a global drop in equities. Oil snapped a seven-day rally while the yen and Treasuries advanced.
The S&P 500 added 0.1 percent to 1,367.59 at 4 p.m. in New York, reversing an early drop of a 0.8 percent and closing at the highest since June 2008. The Dow Jones Industrial Average slipped 1.44 points to 12,981.51, turning lower at the close of trading after failing to hold above 13,000 for a third session in the past week. Oil fell from a nine-month high and the yen gained versus all 16 most-traded peers after the Group of 20 nations rebuffed Europe’s calls for more bailout funding. Ten- year Treasury yields lost five basis points to 1.93 percent.
An S&P gauge of U.S. homebuilders jumped 1.5 percent after the National Association of Realtors said pending sales of existing homes increased 2 percent, twice the median forecast of economists. Earlier losses in stocks were triggered when the G-20 told Europe it needs to come up with more financial firepower before it considers boosting support.
“This has turned into a more resilient market,” Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group LLC in Bedford Hills, New York, said in a telephone interview today. “The U.S. home data has helped the market,” he said. “We don’t see a lot of aggressive buyers, but there are not many aggressive sellers.”
Financial shares and companies that rely on discretionary consumer spending, a group that includes homebuilders and retailers, led gains among the 10 main industries in the S&P 500. Financials recovered from an earlier 1.2 percent slump to end the session up 0.9 percent.
Market Leaders
JPMorgan Chase & Co., Bank of America Corp., American Express Co. and Walt Disney Co. climbed at least 0.8 percent for the biggest gains in the Dow, while Hewlett-Packard Co. and and Boeing Co. fell more than 1 percent for the biggest declines.
Lennar Corp. and D.R. Horton Inc. climbed at least 1.9 percent to pace the advance among builders. Lowe’s Cos., the second-largest U.S. home improvement retailer, rose after fourth-quarter profit exceeded estimates as warmer weather encouraged outdoor projects.
The S&P 500 has more than doubled from its bear-market bottom on March 9, 2009, as corporate earnings beat analyst estimates and U.S. data on consumer sentiment, employment and manufacturing improved.
The S&P 500 will probably gain in the next week and the next 12 months after topping last year’s peak, based on the past seven decades of history, according to Bespoke Investment Group LLC. The benchmark measure of U.S. equities went more than six months without breaking through its high of April 29, 2011, before doing so last week.
Previous Bull Markets
The 13 times this happened in bull markets lasting at least two years, the S&P 500 rallied 0.6 percent on average in the week after setting a new high, and was up a year later every time, averaging gains of 14 percent, data compiled by Bespoke in a Feb. 24 report show.
The Stoxx Europe 600 Index retreated 0.3 percent, paring a drop of as much as 1.2 percent. Nokia Oyj sank 6.1 percent as the world’s third-largest smartphone maker by shipments revealed its latest devices at the Mobile World Congress in Barcelona. A.P. Moeller-Maersk A/S retreated 3.7 percent after saying its container line, the world’s largest, will post a loss again this year, depressed by lower freight rates and slower market growth.
The yen appreciated 0.9 percent against the dollar and climbed 1.2 percent versus the euro. The 17-nation currency slipped 0.3 percent to $1.3406 as it weakened against 11 of 16 major peers. The Dollar Index rose 0.2 percent.
Oil Retreats
Brent crude decreased 1 percent to $124.17 a barrel on the ICE Futures Europe exchange, after gaining 4.9 percent last week. West Texas crude oil in New York dropped 1.1 percent to $108.56.
The S&P GSCI gauge of 24 commodities fell for the first time in eight sessions, declining 0.6 percent, after touching a nine-month high on Feb. 24.
International Monetary Fund Managing Director Christine Lagarde warned the world economy is “not out of the danger zone” amid fragile financial systems and rising oil prices.
Natural gas lost 4.1 percent amid forecasts for above- normal temperatures in the eastern U.S. The fuel is down 18 percent this year. Warren Buffett, who bought about $2 billion in bonds of power company Energy Future Holdings Corp., said the investment is at risk of losing all its value after natural gas prices fell. Buffett’s Berkshire Hathaway Inc. wrote down the debt by $390 million last year, following a $1 billion impairment in 2010, the billionaire said in his annual letter to shareholders posted Feb. 25 on the company’s website.
Bullish Bets
Bullish commodities futures rose above 1 million contracts for the first time in five months as U.S. growth prospects improved and Goldman Sachs Group Inc. predicted further price gains. Hedge funds and money managers boosted combined net-long positions across 18 U.S. futures and options by 7.3 percent to 1.03 million contracts in the week ended Feb. 21, Commodity Futures Trading Commission data show. Bets on oil rose to the most since May as Iran’s pledge to halt oil sales to France and Britain spurred concern supplies will be threatened.
The S&P GSCI Spot Index of 24 commodities capped its biggest weekly increase of the year last week, touching a nine- month high on Feb. 24. U.S. consumer confidence rose more than forecast in February, and new-home sales topped estimates. Goldman reiterated an “overweight” recommendation on raw materials on Feb. 22.
Commodity investments may increase by $30 billion to $40 billion this year as investors favor oil, gold and copper, Barclays Capital said. Assets in commodities rose $15 billion last year, the smallest increase since 2002, to $399 billion, Barclays said.
The MSCI Emerging Markets Index fell 0.9 percent, after reaching a six-month high on Feb. 24. The Hang Seng China Enterprises Index of Chinese shares listed in Hong Kong fell 1.3 percent and India’s Sensex index lost 2.7 percent. South Korea’s Kospi Index dropped 1.4 percent.
--With assistance from John Deane, Mark Gilbert, Will Hadfield, Abigail Moses, Daniel Tilles, Stephen Voss, Jason Webb and Maria Kolesnikova in London, Elizabeth Campbell in Chicago, Michael P. Regan and Andrew Theen in New York and Lynn Thomasson in Hong Kong. Editors: Michael P. Regan, Jeff Sutherland
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
