Thursday, 29 December 2011

Stocks Rally on Economic Data as Euro Erases Drop Versus Dollar

By Michael P. Regan and Rita Nazareth
Dec. 29 (Bloomberg) -- U.S. stocks rose, rebounding from yesterday’s drop, as data signaled the U.S. economy is weathering Europe’s debt crisis. The euro erased an earlier loss and European shares advanced.

The Standard & Poor’s 500 Index climbed 0.8 percent to 1,258.95 at 12:20 p.m. in New York, leaving it up 0.1 percent for the year. The euro was little changed at $1.2941, after slumping as much as 0.6 percent, and trimmed a 0.8 percent slide against the yen to 0.3 percent. Italy’s 10-year bond yield was up less than three basis points at 7.03 percent after climbing 13 basis points earlier. Ten-year U.S. Treasury rates were little changed at 1.91 percent.

U.S. equities extended gains after an index of pending U.S. home sales rose more than economists forecast, while other reports showed stronger-than-projected growth in business activity and a drop in jobless claims over the past month to a three-year low. European stocks fell earlier, while the euro touched a decade low against the yen and a 15-month low versus the dollar, after Italy raised less than its maximum target at a debt auction.

“There has been a much better tone in the U.S.,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview. “We’re optimistic that corporate earnings can continue to be strong and that will be a driver of the market.”

Financial stocks in the S&P 500 rose 1.4 percent as a group today to lead an advance in all 10 of the main industries as Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. rallied at least 2 percent. The group of 80 banks, insurers and investment firms has tumbled 18 percent this year for the worst performance among the 10 industries.

Homebuilders Rally

PulteGroup Inc. and M/I Homes Inc. rose more than 4 percent to lead gains in all 12 companies in an S&P gauge of homebuilders. The National Association of Realtors’ index of pending home sales increased 7.3 percent to the highest level since April 2010. Economists forecast a 1.5 percent gain, according to the median estimate in a Bloomberg News survey.

The four-week moving average for jobless claims, a less volatile measure than the weekly figures, dropped to 375,000 last week, the lowest level since June 2008, Labor Department figures showed. Applications rose for the first time in a month in the week ended Dec. 24, climbing by a more-than-forecast 15,000 to 381,000.

Other data showed business activity in the U.S. expanded more than forecast in December, prompting companies to boost employment. The Institute for Supply Management-Chicago Inc.’s business barometer was 62.5. Readings above 50 signal growth. Economists forecast the gauge would fall to 61, according to the median of estimates in a survey.

Commodities Slip

The S&P GSCI Index of commodities retreated 0.3 percent as natural gas, cocoa and gold led losses among 17 of 24 commodities.

Gold futures fell as much as 2.6 percent to $1,523.90 an ounce, the lowest price since July. Oil in New York lost 0.4 percent to $98.99 a barrel after falling 2 percent yesterday.

The Stoxx Europe 600 Index increased 0.9 percent as real- estate firms, utilities and chemical companies led gains. The Stoxx 600 has dropped 12 percent this year, compared with an 18 percent slump in the MSCI Asia Pacific Index. The S&P 500 has drifted above and below its 2010 closing level since the end of October.

The MSCI Emerging Markets Index was little changed after falling for three straight day. Russia’s Micex rose 0.4 percent. Indian stocks dropped for a third day, with the Sensex sliding 1.2 percent. China’s Shanghai Composite Index advanced 0.2 percent, a second straight day of gains that trimmed its yearly decline to 23 percent.

--With assistance from Shiyin Chen in Singapore, Mariko Ishikawa in Tokyo, Paul Dobson, Claudia Carpenter, Ash Kumar and Andrew Rummer in London and Robert Willis in Washington. Editors: Michael P. Regan, Jeff Sutherland

To contact the reporters on this story: Rita Nazareth in Sao Paulo at; 
Michael P. Regan in New York at

To contact the editor responsible for this story: Nick Baker at