U.S. stocks rose, after the Standard & Poor’s 500 Index ended a four-day rally yesterday, as earnings and a $45.2 billion takeover of Time Warner Cable (TWC:US) Inc. overshadowed an unexpected drop in retail sales. Treasuries advanced and natural gas surged.
The S&P 500 climbed 0.6 percent to the highest since Jan. 22 at 4 p.m. in New York, reversing early losses after falling to its 50-day average price. Time Warner Cable gained 7 percent after Comcast Corp. agreed to buy it. Treasury 10-year yields fell three basis points to 2.73 percent. Natural gas futures jumped 7.7 percent after stockpiles dropped and a winter storm hit the eastern U.S. Gold topped $1,300 for the first time since November.
CBS Corp. and Goodyear Tire & Rubber Co. gained at least 4.5 percent on optimism about earnings. Applied Materials Inc. rallied after saying customers have boosted spending on chip factories. Comcast’s planned purchase of Time Warner combines the two largest U.S. cable companies and creates a bulwark against competition from phone and satellite providers. Retail sales fell in January by the most since June 2012 and more Americans than forecast filed applications for unemployment benefits last week, reports showed today.
“People want to buy the dips now because the market made a bottom after Feb. 3,” Donald Selkin, who helps manage about $3 billion as chief market strategist at National Securities Corp. in New York, said in a phone interview. “We got very oversold and now it’s believed that the trend is turning back up. People feel like we’ve seen a near-term bottom in the market.”
5.1 Percent Rebound
The S&P 500 closed at a record on Jan. 15 and then dropped 5.8 percent through Feb. 3 on signs of slowing growth in China and a rout in emerging-market currencies. The gauge has since rebounded 5.1 percent, restoring $800 billion to share values in a week, as investors speculate economic growth is strong enough to withstand further cuts to Federal Reserve monetary stimulus. Fed Chair Janet Yellen indicated on Feb. 11 that the central bank is on track to taper stimulus unless there is a long period of weak data.
The index is now 1 percent below its all-time high.
Yellen, delivering her first public remarks as Fed chair, said growth has strengthened and there is “broad improvement” in the labor market. Her testimony before Congress scheduled for today was canceled because of the snow storm.
Retail sales fell in January as inclement weather kept some consumers away from auto showrooms and store. The median forecast of 86 economists surveyed by Bloomberg called for no change. The drop followed a revised 0.1 percent decline in December that was previously reported as an increase. A Labor Department report showed the number of Americans filing applications for unemployment benefits rose by 8,000 to 339,000 in the week ended Feb. 8.
“By now, I think the market has well discounted weather as reason for recent economic weakness, and continues to be comfortable with Fed tapering so long as their economic outlook hasn’t changed,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an interview. His firm oversees $290 billion.
The S&P 500 reversed today after slipping below 1,810 in the first minutes of trading, a level representing its average price in the last 50 days that is considered significant by analysts who analyze charts.
A total of 17 companies in the S&P 500 were scheduled to post earnings today, including Cliffs Natural Resources Inc. and American International Group Inc. Almost 76 percent of the companies in the index that have posted earnings this season have exceeded analysts’ estimates, according to data compiled by Bloomberg.
CBS increased 4.5 percent after the owner of the most-watched television network reported better-than-estimated quarterly profit. Goodyear rallied 12 percent as results topped analysts’ forecasts. Facebook Inc. advanced 4.5 percent to a record.
Applied Materials rallied 5.4 percent, an eighth straight gain that helped the Nasdaq 100 Index reach its highest level since 2000. The largest supplier of semiconductor-manufacturing equipment forecast fiscal second-quarter sales growth of as much as 10 percent as memory chipmakers boost spending on factory upgrades.
The MSCI Emerging Markets Index fell 0.6 percent, retreating from a three-week high. Brazil’s Ibovespa index slid 0.8 percent after a report showed retail sales unexpectedly declined in December. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 1.2 percent, snapping the biggest two-day rally since November. India’s S&P BSE Sensex dropped 1.3 percent, falling for the first time in three days.
West Texas Intermediate oil settled at $100.35 a barrel in New York. Yesterday’s settlement of $100.37 was the highest since Oct. 18.
Natural gas jumped as stockpiles shrank for a 13th week, according to Energy Information Administration data today.
Gold futures for delivery in April rose 0.4 percent to settle at $1,300.10 on the Comex in New York. The metal advanced for the seventh straight session, capping its longest rally since July 2011.
The Bloomberg Dollar Spot Index decreased 0.4 percent to 1,020.03. The Swiss franc rose against all but one of its 16 major counterparts, gaining 0.7 percent to 89.41 centimes per dollar. The euro added 0.7 percent to $1.3681. The yen appreciated 0.3 percent to 102.24 per dollar.
The ruble dropped 1.3 percent to 41.0154 against the central bank’s basket of dollars and euros by 6 p.m. in Moscow, when the central bank stops its market operations. That’s the biggest decline since June 20.
The Aussie weakened to as low as 89.88 U.S. cents after data showed that the number of full-time jobs declined by 7,100 in January. The yield on the nation’s 10-year bonds fell five basis points to 4.18 percent, for the biggest decline since Jan. 30.
In Europe, the Stoxx 600 trimmed an earlier decline of 1 percent to close lower by 0.2 percent, the first retreat in seven sessions to halt the gauge’s longest winning streak of the year.
BNP Paribas SA slid 2.6 percent. Nestle SA dropped 1.5 percent after the world’s largest food company predicted growth near the low end of its target. Rolls-Royce Holdings Plc sank 14 percent after the maker of commercial-jet engines said sales won’t grow this year for the first time in a decade.
Renault SA (RNO) rallied 5.6 percent after Europe’s third-largest carmaker said full-year operating profit jumped 59 percent as low-cost models from the Dacia brand pushed delivery growth and the company lowered costs. Commerzbank AG, Germany’s second-biggest bank, climbed 1.5 percent after reporting quarterly earnings that beat projections.
German 10-year bunds rose for the first time in four days, pushing the yield five basis points lower to 1.67 percent. The rate on similar-maturity U.K. gilts slid three basis points to 2.79 percent.
Treasuries advanced for the first time in three days after the weaker-than-forecast data spurred demand for the safest securities. The Treasury auctioned $16 billion of 30-year bonds today after selling 10-year notes yesterday and three-year securities the previous day.
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