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Stocks, Commodities Gain on Earnings, Economy; Dollar Weakens
2010-07-22 15:14:02.255 GMT
By Nikolaj Gammeltoft and Stephen Kirkland
July 22 (Bloomberg) -- Stocks, oil and copper rallied on
improving profit forecasts at companies from United Parcel
Service Inc. to AT&T Inc. and accelerating growth in European
manufacturing and services industries. The euro strengthened and
two-year Treasury yields increased from a record low.
The Standard & Poor's 500 Index jumped 2.3 percent to
1,094.08 at 11:13 a.m. in New York and the Stoxx Europe 600
Index climbed 1.9 percent, the biggest gains for both in at
least a week. Oil topped $78 a barrel and copper rose for a
fourth day, sending an index of commodities up the most since
July 7. The euro surged 1.2 percent versus the dollar and yen.
Two-year Treasury yields rose 2 basis points to 0.58 percent.
U.S. equities rebounded from yesterday's slide as
Caterpillar Inc. and EBay Inc. also posted better-than-estimated
earnings and home prices unexpectedly rose, overshadowing
Federal Reserve Chairman Ben S. Bernanke's assessment that the
economic outlook was "unusually uncertain." The euro, which
slid to a four-year low in June, has risen almost 9 percent
since amid optimism the region's debt crisis is contained.
"The earnings guidance from some of the bigger global
companies is looking better," said Mike Morcos, senior money
manager at Old Second Wealth Management in Aurora, Illinois,
which oversees about $1.1 billion. "The market is in a battle
between fear and optimism, and today we have some positive news
which indicate it may not all be doom and gloom."
S&P 500's Rebound
The S&P 500 has rallied more than 7 percent from a 10-month
low earlier this month amid speculation that growth in earnings
will signal a stabilizing economy. Of the 124 companies in the
index that released second-quarter results since June 12, 85
percent have beaten the average analyst earnings estimate,
according to data compiled by Bloomberg.
Equities added to gains and Treasuries extended losses
today after a National Association of Realtors report showed the
median U.S. home price increased 1 percent last month to
$183,700 from $181,800 in June 2009.
The yield on the 10-year Treasury note climbed four basis
points to 2.93 percent. The U.S. will announce today plans to
sell $105 billion in two-, five- and seven-year notes next week,
the smallest monthly offering of the securities since June 2009,
according to a Bloomberg News survey of 10 primary dealers,
companies required to bid at the sales.
UPS Leads Transports
UPS, the world's largest package-delivery company, surged
6.6 percent as growing overseas demand improves its earnings
outlook. The shares led the Dow Jones Transportation Average to
a 4.3 percent advance, the biggest since June 10. EBay rallied
5.8 percent, while AT&T climbed 2.9 percent and Qualcomm Inc.
jumped 8.4 percent as the maker of chips for mobile phones
predicted higher prices for devices that use its technology.
More than 50 S&P 500 companies were scheduled to report results
today.
Goldman Sachs Group Inc. and Morgan Stanley led $14.2
billion in U.S. corporate bond sales yesterday in the busiest
day in almost four months as yields on company debt fell to the
lowest in six years. Goldman Sachs raised $3 billion in a two-
part bond offering, its biggest since January 2009, according to
data compiled by Bloomberg. Morgan Stanley also issued $3
billion of debt after it reported second-quarter earnings that
surpassed analyst estimates.
European Rally
All 19 industry groups in the Stoxx 600 advanced after a
composite index based on a survey of euro-area purchasing
managers in manufacturing and service industries rose to 56.7
from 56 in June, according to Markit Economics.
ABB Ltd., the world's largest builder of electricity
networks, gained 4.5 percent in Zurich after earnings beat
estimates.
Banks rallied, with HSBC Holdings Plc, Europe's biggest
lender, rising 2.5 percent. Banco Santander SA, Spain's largest
bank, climbed 2.7 percent. Gains were limited as Credit Suisse
Group AG fell 1 percent after reporting a drop in profit at its
investment banking unit.
Bank of Ireland Plc and Allied Irish Banks Plc, the
country's two biggest banks, climbed at least 2 percent. Both
are both set to pass the European Union's stress tests on
lenders, according to a person with direct knowledge of the
matter.
The cost of insuring against losses on European high-yield
bonds fell to the lowest level in a month, according to traders
of credit-default swaps. Contracts on the Markit iTraxx
Crossover Index of 50 companies with mostly high-yield credit
ratings decreased 7 basis points to 514, the lowest since June
21, according to JPMorgan Chase & Co. prices at 2 p.m. in
London.
Asian, Emerging Markets
The MSCI Asia Pacific Index was little changed, rising less
than 0.1 percent. The MSCI Emerging Markets Index rose 0.9
percent, after earlier dropping as much as 0.5 percent.
The dollar weakened against 14 of its 16 most-traded peers,
depreciating 1.2 percent to $1.2907 per euro.
Copper climbed 3 percent to $3.1855 a pound in New York,
the highest price since May. Gold for immediate delivery gained
0.9 percent to $1,195.80 an ounce. Crude oil rallied 2.7 percent
to $78.66 a barrel in New York.
Natural gas futures pared gains after the U.S. Energy
Department released its weekly inventory report. Natural gas for
August delivery rose 10.4 cents, or 2.3 percent, to $4.617 per
million British thermal units on the New York Mercantile
Exchange.
For Related News and Information:
Developed Markets View: DMMV <GO>
Emerging Markets View: EMMV <GO>
Stock Market Map: IMAP <GO>
World Equity Markets: WEI <GO>
World Bond Markets: WB <GO>
Pipeline of Bonds: PREL <GO>
World Currency Ranker: WCRS <GO>
Commodity Ranked Returns: CRR <GO>
Credit-Default Swap Indexes: MKIT <GO>
World Trends and Reversals: WTR <GO>
Graphing: GRAPH <GO>
--With assistance from Tim Catts and John Detrixhe in New York;
Claudia Carpenter, David Merritt, Michael Patterson, Daniel
Tilles, Abigail Moses, Joe Brennan and Alexis Xydias in London.
Editor: Michael P. Regan, Stephanie Borise
To contact the reporter on this story:
Stephen Kirkland in London at +44-20-7073-3172 or
skirkland@bloomberg.net
To contact the editor responsible for this story:
Nick Baker at +1-212-617-5919 or nbaker7@bloomberg.net.
