U.S. stocks gained, sending the Standard & Poor’s 500 Index to the biggest two-day increase since January, and Treasuries fell after a better-than-estimated jobs report signaled the economy continues to expand. The dollar climbed and oil rose.
The S&P 500 (SPX) advanced 1.3 percent to 1,643.38 at 4 p.m. in New York. The Stoxx Europe 600 Index added 1.3 percent. The 10-year Treasury yield rose nine basis points to 2.17 percent and yields on similar maturity Italian bonds fell the most in two months. The U.S. currency gained versus a majority of its most-traded peers. Oil climbed to a two-week high, while gold and silver dropped more than 2.3 percent.
U.S. payrolls rose 175,000 last month after a revised 149,000 increase in April that was smaller than first estimated, Labor Department figures showed today. The median forecast in a Bloomberg survey called for a 163,000 gain. The S&P 500 is down 1.9 percent since closing at a record on May 21, the day before Federal Reserve Chairman Ben S. Bernanke suggested the central bank could curtail its $85 billion monthly bond purchases if the job market improved in a “real and sustainable way.”
“It’s the kind of report that doesn’t change the Fed’s stance in the short term,” Dan Veru, chief investment officer at Palisade Capital Management LLC, said via phone. The Fort Lee, New Jersey-based firm manages $3.8 billion. “It was a number that was strong enough to indicate that we’re still making progress, but the improvements aren’t happening too fast to warrant the Fed to aggressively taper their bond purchases.”
The improvement in the labor market is a sign companies are looking beyond fiscal restraint this quarter and are optimistic enough about the prospects for demand in the second half of the year. At the same time, bigger job and wage gains are needed to move Fed policy makers closer to scaling back record monetary stimulus. The U.S. unemployment rate rose to 7.6 percent from 7.5 percent, the report showed.
The S&P 500 has risen 0.8 percent this week. Nine of 10 main industries in the index advanced today, with phone companies and makers of household goods advancing at least 1.6 percent to pace gains. The Chicago Board Options Exchange Volatility Index, or VIX, lost 9.6 percent to 15.04.
Wal-Mart Stores Inc. (WMT:US) added 0.9 percent after approving a new $15 billion share buyback program. Yum! Brands Inc. rose 3.4 percent after UBS AG recommended investors buy the shares. Gap Inc. advanced 2.7 percent after reporting same-store sales for May that beat analyst estimates. TiVo Inc. fell 17 percent after settling a patent dispute for less than estimated.
The Stoxx 600 lost 1.8 percent this week. Royal KPN NV jumped 6 percent after Sanford C. Bernstein & Co. raised its rating on the stock. Ipsen SA rose 2.1 percent after Goldman Sachs Group Inc. advised buying the shares.
Bill Gross, manager of the world’s biggest bond fund, said the Federal Reserve is unlikely to reduce its asset purchases after the unemployment rate climbed from a four-year low in May.
“I don’t think today’s report says anything about tapering at all with unemployment going higher and metrics in terms of the work week and wages being very” dire, Pacific Investment Management Co.’s founder Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Mike McKee. Bernanke “won’t taper. But I think ultimately in order to get a more normal economy, the Fed has got to move interest rates up to more normal levels.”
Treasuries have lost 1.7 percent since the end of April, according to Bank of America Merrill Lynch indexes, amid speculation the Fed will slow the pace of its asset purchases. Volatility in Treasuries as measured by the Bank of America Merrill Lynch MOVE index climbed to 84.75 yesterday, the highest since June 2012.
Italian 10-year yields fell 18 basis points, or 0.18 percentage point, to 4.19 percent, the biggest decline since April 5. The rate on similar-maturity Spanish bonds fell 15 basis points to 4.54 percent, while Germany’s 10-year bund yield rose three basis points to 1.55 percent.
The greenback added 0.5 percent to 97.44 yen. While the yen fell today, it is poised for a weekly gain versus the dollar after Japanese Finance Minister Taro Aso said he had no immediate intention to weaken the currency.
The zloty advanced the most in 10 months as Poland’s central bank sold foreign currencies on the market to curb volatility, which set a six-month high. The central bank’s first market purchases since 2011 helped the zloty advance 1.7 percent to 4.2419 per euro, the biggest appreciation since Aug. 3, after slumping to a one-year low yesterday.
Gold and silver futures dropped on concern the Fed may scale back monetary stimulus. Bullion declined 2.3 percent to $1,383 an ounce on the Comex. Silver retreated 4.2 percent to $21.745 an ounce. Aluminum, lead, nickel and zinc were also lower.
“The report gives fodder to both camps in the tapering versus the no tapering debate, so it means that discussion will remain alive and well,” Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC in Philadelphia, which manages about $58 billion, said by phone.
The MSCI Emerging Markets Index fell 0.5 percent, heading for its fourth weekly decline. The Shanghai Composite Index slid 1.4 percent to a one-month low as money-market rates jumped and economists forecast a report tomorrow will show export growth slowed in May. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong dropped 1.7 percent, retreating for an eighth day in the longest losing streak in more than a year.
Turkish stocks rallied on bets the worst weekly equity retreat since 2008 triggered by anti-government protests was overdone. The benchmark Borsa Istanbul (XU100) Stock Exchange National 100 Index rose 3.2 percent, climbing from a six-month low. The index has tumbled since the violent clashes between protesters and police that began on May 31. The lira strengthened for the first time in three days and bonds gained today.
To contact the reporters on this story: Stephen Kirkland in London at email@example.com; Nikolaj Gammeltoft in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Lynn Thomasson at email@example.com