Bloomberg News

U.S. Stocks Climb for Fifth Day on Earnings as Ruble, Gold Drop

April 21, 2014

Japan Exports

Nissan Motor Co. vehicles bound for shipment sit in a lot at a port in Hitachi City, Ibaraki Prefecture, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

U.S. stocks rose a fifth day, capping the longest rally for the Standard & Poor’s 500 Index since October, on signs earnings are improving. The ruble slipped after a deadly clash in Ukraine, as gold and wheat fell.

The S&P 500 (SPX) gained 0.4 percent to 1,871.89 in New York, following a 2.7 percent advance last week. Ten-year Treasury yields fell one basis point to 2.72 percent by 5 p.m. in New York. The ruble lost 0.3 percent versus the dollar as the yen dropped versus most major peers. Gold slid to a two-week low and wheat futures slid 3.4 percent, the biggest drop in a year.

Netflix Inc. jumped in extended trading after reporting better earnings than analysts estimated, while an index of U.S. leading indicators rose the most in four months. Ukraine warned that Russia may use a fatal shootout in the country’s east as a pretext for invasion as an accord reached last week showed little sign of taking hold. Markets in the U.K., Germany, Hong Kong and Australia were closed for the Easter Monday holiday.

“All the fundamentals still line up that stock prices can go higher,” John Fox, director of research at Fenimore Asset Management in Cobleskill, New York, said in a phone interview. “The few earnings that we’ve had so far have been coming in pretty well.”

Netflix gained more than 6 percent after markets closed as it reported better-than-projected sales, profit and subscriber growth. The online video service also said it will raise prices. Allergan Inc., maker of the Botox cosmetic treatment, soared 12 percent in extended trading after a media report that New York hedge fund manager Bill Ackman and Valeant Pharmaceuticals International Inc. are teaming up to bid for the drugmaker.

U.S. Movers

The S&P 500 jumped the most since July last week, rebounding from a technology-led selloff, as earnings from Morgan Stanley to Citigroup Inc. (C:US) and Yahoo! Inc. surpassed estimates and Federal Reserve Chair Janet Yellen reiterated the bank’s commitment to supporting the economy.

Newmont Mining Corp. advanced 6.4 percent in normal trading hours as it discussed a possible merger with Barrick Gold Corp., people with the knowledge of the matter said. Halliburton Co. (HAL:US) climbed 3.3 percent in a fifth day of gains after forecasting profit growth for the second quarter. Athenahealth Inc. fell 6.9 percent after reporting quarterly earnings that missed projections.

Earnings Analysis

Continued gains in the labor market, improvements in consumer sentiment and strengthening demand are boosting consumption among U.S. households. The Conference Board’s index, a gauge of the outlook for the next three to six months, rose 0.8 percent after a 0.5 percent gain in February, the New York-based group said. The median forecast of 42 economists surveyed by Bloomberg called for an advance of 0.7 percent.

More than 70 percent of the S&P 500 member companies that have announced results this season have beaten analysts’ profit estimates, data compiled by Bloomberg show. Analysts project that earnings at S&P 500 companies increased 0.7 percent in the first quarter, while revenue climbed 2.6 percent, according to the average estimate.

The MSCI Emerging Markets Index dropped 0.1 percent, snapping a three-day climb, while the Micex Index in Moscow dropped 0.9 percent. The ruble retreated a second day versus the dollar-euro basket used by Russia’s central bank to stem the impact of currency fluctuations.

Ukraine Unrest

Russia’s Foreign Ministry blamed the Ukrainian nationalist group Pravyi Sektor for violence which left at least three people dead over the weekend, an allegation that Pravyi Sektor denied in a statement. Viktoria Syumar, first deputy head of the National Security and Defense Council in Kiev, said on her Facebook page that Russia’s accusation and statements show it’s preparing to invade Ukraine.

The discord adds to skepticism over whether Ukraine, the U.S. and the European Union will be able to use an April 17 Geneva accord to encourage Russian President Vladimir Putin to ease tensions that he says he’s had no role in creating.

The Shanghai Composite Index fell 1.5 percent amid speculation that new initial public offerings and sales of preferred shares by lenders will sap liquidity in the market. India’s S&P BSE Sensex Index added 0.6 percent, advancing for a second day.

U.S. debt climbed before the Treasury sells $96 billion in coupon-bearing notes starting tomorrow. Ten-year Treasury notes yielded 67 basis points more than their Group of Seven counterparts last week, the most in four years, as the Fed unwinds its bond-buying program while Japan and Europe consider additional stimulus.

‘General Uncertainty’

“It’s general uncertainty, it’s the back-and-forth headlines” on Ukraine, said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald LP in New York, one of the 22 primary dealers that trade directly with the Federal Reserve.

Gold slid 0.3 percent to $1,289.99 an ounce in the spot market. The metal has pared its advance in 2014 as investors assess prospects for further cuts to the Federal Reserve’s bond buying program amid signs of recovery in the world’s largest economy.

“It is very difficult for gold to sustain the panic that makes it a good safe-haven trade,” Frances Hudson, a strategist at Standard Life in Edinburgh, which oversees $294 billion. “I see demand for gold remaining non-enthusiastic. Things are looking better in the U.S. and Europe. It’s not that both these economies are racing ahead, but they are gradually improving.”

Japan Deficit

The yen weakened 0.2 percent to 102.60 per dollar and lost at least 0.1 percent against the euro, Swiss franc and Norwegian krone. Japan’s trade deficit quadrupled from a year earlier to 1.45 trillion-yen ($14.1 billion) in March, larger than the 1.08 trillion yen gap projected by economists amid the weakest export growth in a year.

“Japan’s trade deficit was much larger than expected, so it helped to push the yen lower,” said Marito Ueda, senior managing director at currency-margin company FX Prime Corp. in Tokyo. “We’re likely to shift to a dollar-strength story from a yen weakness story going forward as we start to see good data from the U.S.”

Wheat fell on speculation that rains over the weekend may have aided crops threatened by drought in the U.S., the world’s biggest shipper. Rain should build across northwestern areas of the Midwest over the weekend and push into central areas today, according to MDA Information Systems LLC.

West Texas Intermediate crude oil climbed 0.1 percent, rising a third day to reach $104.37 a barrel, the highest settlement since March 3. Brent crude also gained, adding 0.4 percent to $109.94 a barrel, also a seven-week high.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Emma O’Brien


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Companies Mentioned

  • C
    (Citigroup Inc)
    • $53.04 USD
    • -0.44
    • -0.83%
  • HAL
    (Halliburton Co)
    • $64.68 USD
    • -1.83
    • -2.83%
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