Stocks (SPX) rose for a third day and commodities rallied as a jump in U.S. housing starts and drop in jobless claims fueled optimism in the world’s largest economy. The yen slid to the lowest since 2010 versus the dollar.
The Standard & Poor’s 500 Index gained 0.7 percent to 1,482.96 at 4 p.m. in New York, capping the longest rally in a month. Oil surged 1.3 percent to a four-month high of $95.49 a barrel to pace gains in commodities. The yen slid as much as 1.9 percent as Japan’s economy minister said the currency has more room to decline. The euro strengthened against all 16 major peers while the Swiss franc slid to the weakest level since the central bank introduced a currency cap in 2011. Yields on 10- year Treasuries rose five basis points to 1.87 percent.
Stocks jumped as applications for jobless benefits fell in the week ended Jan. 12 to the lowest level in five years, and housing starts climbed 12.1 percent last month, government data showed. Economy Minister Akira Amari said the yen is still in the process of correcting from excessive gains and that his remarks earlier this week on yen weakness were misinterpreted.
“We’re getting signs that both housing and the labor market are improving,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $170 billion. “Housing, in particular, is a huge number. It’s positive for the economy, it’s positive for earnings and for the stock market.”
Intel Corp., Walt Disney Co. (DIS:US) and Home Depot Inc. paced gains in the Dow Jones Industrial Average, which climbed above its highest close since 2007 during the day before paring gains. PulteGroup Inc. led an S&P gauge of homebuilders to the highest level since 2007.
U.S. housing starts climbed to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists and the most since June 2008, the Commerce Department reported today. Jobless claims decreased by 37,000 to 335,000 in the week ended Jan. 12, Labor Department figures showed. Economists forecast 369,000 claims, according to the median estimate in a Bloomberg survey.
CBS Corp. (CBS:US) jumped 7.9 percent after saying it will convert its outdoor advertising division into a real estate investment trust and seek a buyer for the European and Asian parts of the business.
BlackRock Inc. (BLK:US), the world’s biggest money manager, gained 4.4 percent after reporting adjusted fourth-quarter earnings of $3.93 a share, compared with the $3.71 a share average estimate of six analysts surveyed by Bloomberg.
Bank of America Corp. declined 4.2 percent after reporting earnings that decreased 64 percent. Of the 52 companies that posted quarterly results so far, 71 percent topped analysts’ profit projections, according to data compiled by Bloomberg.
Almost four shares rose for every one that declined in the Stoxx 600. Carrefour SA, Delhaize Group SA (DELB) and Associated British Foods Plc led gains among retailers. Carrefour, France’s biggest retailer, climbed 6.1 percent and Delhaize, the owner of Food Lion supermarkets in the U.S., rallied 10 percent as fourth-quarter revenue increased. AB Foods advanced 3.2 percent as the U.K. sugar producer that owns Primark clothing stores reported a 10 percent gain in first-quarter sales.
The yen slid more than 1.5 percent against its 16 major peers before the Bank of Japan (8301) reviews its 1 percent inflation goal at a Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled as he works to spur economic growth.
BOJ and government officials reached basic agreement on a joint statement calling for a 2 percent inflation target and additional funds for purchasing assets, Nikkei reported without attribution.
The 17-nation euro gained 0.7 percent to $1.3377 as it strengthened against all 16 counterparts after Spain’s borrowing costs decreased at a 4.5 billion bond auction.
Switzerland’s franc fell as much as 1 percent to 1.2490 per euro, the weakest since May 2011. The currency declined against 15 of 16 major peers as signs Europe’s debt crisis is easing sapped demand for haven assets.
Major currencies have been roiled this week as policy makers stepped up warnings on swings in exchange rates. Thailand’s finance minister today said the baht is “not at a good level,” while a Russian central bank official yesterday said the world is on the brink of a “currency war.” A JPMorgan index of volatility for currencies of Group of Seven nations jumped 5.9 percent to 8.9 today, the highest level since August.
The MSCI Emerging Markets Index (MXEF) rose 0.2 percent. India’s Sensex gained 0.7 percent as foreign investors added to their holdings of domestic shares for a 13th straight day. Russia’s Micex Index was little changed and Brazil’s Bovespa gauge gained 0.7 percent. The Shanghai Composite Index slid 1.1 percent before a report on fourth-quarter growth figures tomorrow.
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