Bloomberg News

U.S. Stocks Gain on Economy Data as Oil Drops on Output

October 03, 2012

Commodities Drop as Dollar Climbs on China

The Standard & Poor’s GSCI gauge of 24 raw materials dropped 0.7 percent at 7:39 a.m. New York time, led by crops, while oil slipped 0.7 percent. Photographer: Ken James/Bloomberg

U.S. stocks rose, sending the Standard & Poor’s 500 Index (SXXP) up for a third day, as data showed better-than-forecast growth in jobs and service industries. Oil sank after American production climbed to the highest since 1996. The dollar gained and Treasuries were little changed.

The Standard & Poor’s 500 Index (HSCEI) climbed 0.4 percent to close at 1,450.99 at 4 p.m. in New York, paring a gain of 0.6 percent as declines in energy producers and Hewlett-Packard Co. (HPQ:US) weighed on the market. Ten-year Treasury yields were little changed at 1.61 percent after falling two basis points earlier. The S&P GSCI gauge of 24 raw materials dropped 2.3 percent, the most since July, as oil and natural gas tumbled at least 3.9 percent. The dollar appreciated against 14 of 16 major peers.

S&P 500 futures turned higher before the open of exchanges in New York after ADP Employer Services said companies added 162,000 jobs last month, topping the median forecast of economists surveyed by Bloomberg for a 140,000 increase. Service industries in the U.S. expanded by the most in six months, another report showed. Futures and European stocks slipped earlier as a report showed Chinese services industries expanded at the weakest pace since at least March 2011.

“There has been an ongoing tug of war as to whether or not the liquidity coming into the markets can counteract perhaps weaker earnings,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial, which oversees $943 billion, said by phone. While today’s data “are positive underpinnings for the market,” she said, the range-bound trading “will continue until investors feel comfortable enough to go in with longer positions in the equity market. Market participants are still worried about the economy.”

Jobs Data

The ADP data comes two days before a government jobs report that economists forecast will show the nation added 115,000 jobs last month and the unemployment rate increased to 8.2 percent from 8.1 percent. Profits at S&P 500 companies are projected to have dropped 2 percent in the third quarter, according to analyst estimates compiled by Bloomberg. Alcoa Inc. is scheduled to mark the unofficial start of the earnings season when it reports results on Oct. 9.

The S&P 500 is down 1 percent from an almost five-year high set on Sept. 14, trimming a drop of as much as 2.2 percent. Gauges of telephone, consumer-discretionary and financial shares led gains in eight of the 10 main industry groups in the S&P 500 today.

Market Movers

Best Buy Co. jumped 4.7 percent on a Reuters report the retailer’s founder and buyout firms are scrutinizing the company’s finances. Monsanto Co. (MON:US) fell 2.2 percent as the world’s largest seed company forecast 2013 earnings below analyst estimates. Hewlett-Packard Co. tumbled 13 percent as Chief Executive Officer Meg Whitman projected a profit decline for fiscal 2013 as a turnaround effort at the struggling computer maker takes longer than expected.

The Stoxx Europe 600 Index fell 0.1 percent after slumping 0.5 percent earlier. The volume of shares changing hands in the index’s companies was 17 percent less than the 30-day average, before a meeting of European Central Bank policy makers tomorrow, according to data compiled by Bloomberg.

FirstGroup Plc (FGP) plunged 21 percent, the most on record, after the U.K. rail operator was stripped of the right to operate West Coast trains from London to Scotland. EasyJet Plc climbed 3.5 percent as Europe’s second-biggest discount airline said full-year earnings beat its forecasts.

Oil declined 4.1 percent to $88.14 a barrel after a government report showed that U.S. crude output climbed to the highest level in more than 15 years and fuel consumption decreased. Natural gas lost 3.9 percent, the most in seven weeks, on forecast of moderating temperatures. Gasoline dropped 2.4 percent as 18 of 24 commodities tracked by the S&P GSCI retreated.

Emerging Markets

The MSCI Emerging Markets Index fell 0.4 percent, declining for the first time in five days. The Hang Seng China Enterprises Index slid as much as 0.4 percent, the most in a week, before paring its loss to less than 0.1 percent. Financial markets in China and South Korea were closed.

China’s purchasing managers’ index fell to 53.7 in September from 56.3 in August, according to the National Bureau of Statistics and China Federation of Logistics and Purchasing.

Australia’s dollar declined for a fourth straight day as the nation recorded its widest trade deficit since 2008 in August. It dropped to as low as $1.0196, the weakest level since Sept. 6.

South Africa’s rand depreciated 0.8 percent against the dollar on rising expectations the central bank will cut interest rates to stimulate growth. The dollar strengthened against 14 of 16 major currencies, up 0.1 percent at $1.2903 per euro and 0.5 percent higher at 78.52 yen.

European Yields

Yields on 10-year Italian government bonds increased one basis point to 5.04 percent, after earlier slipping below 5 percent. The rate on similar-maturity Spanish securities added six basis points to 5.81 percent.

Spanish Prime Minister Mariano Rajoy said yesterday he has no plans to request rescue funds in the near term, defying market speculation that the nation would ask for a bailout which would pave the way for the ECB to buy its debt.

There’s “ongoing uncertainty about the timing of Spain’s formal request for an official program and concerns about global growth,” Barclays Plc’s head of European currency strategy, Guillermo Felices, wrote in a report to investors. “We remain constructive on risky assets, but think better news is needed on both fronts for the rally to regain momentum.”

The cost of insuring European corporate and sovereign debt using credit-default swaps fell for a third day, to the lowest levels in more than a week. The Markit iTraxx Crossover Index (MXEF) of swaps on 50 mostly junk-rated companies declined eight basis points to 549.

Portuguese debt agency IGCP bought 3.76 billion euros ($4.9 billion) of bonds due next year in exchange for securities due in 2015 as the nation takes steps to return to international credit markets.

To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • HPQ
    (Hewlett-Packard Co)
    • $35.04 USD
    • 0.06
    • 0.17%
  • MON
    (Monsanto Co)
    • $116.19 USD
    • -0.08
    • -0.07%
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