U.S. Stocks Halt Global Slump, Treasuries, Dollar Erase Gains
By Rita Nazareth and Kelly Bit
July 7 (Bloomberg) -- U.S. stocks rallied, halting a global slump, and the dollar and Treasuries erased earlier gains as State Street Corp.’s profit and growth in American retail sales bolstered optimism in the second-quarter earnings season.
The Standard & Poor’s 500 Index rose 1.5 percent to 1,043.68 at 11:06 a.m. in New York. The Stoxx Europe 600 Index climbed 1.3 percent, erasing a tumble of as much as 1.5 percent, and the MSCI World Index of stocks in 24 developed nations added to gains from its biggest advance in a month yesterday. The Dollar Index fell 0.1 percent, reversing a 0.4 percent advance, and 10-year Treasury yields rose two basis point to 2.95 percent after slipping as low as 2.91 percent. Oil and copper rallied.
Banks led the S&P 500 higher after State Street swung to a profit and removed redemption restrictions on clients at its securities lending business. Twenty-nine of 31 retailers in the index advanced as the International Council of Shopping Centers said sales at the beginning of the year were growing at the fastest pace since 2006, easing concern that a slump in consumer confidence will undermine the economic recovery.
“The market is very oversold,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion. “The improvement in retail sales numbers was enough to get some people back in. Over the next few weeks, we’ll probably get both economic and earnings data that will show that we’re not going to go back into recession.”
Slowdown Concern
The S&P 500 has tumbled 15 percent from its high for the year in April amid a slowdown in the manufacturing and service industry expansion, a slow-to-recover labor market and concern over Europe’s debt crisis and China’s steps to cool its economy.
The Dow Jones Industrial Average rose yesterday for the first time in eight days, snapping its longest losing streak since the financial crisis of 2008. Profit for S&P 500 companies is projected to increase 34 percent in 2010, compared with the 27 percent estimated on March 29, according to more than 8,000 estimates compiled by Bloomberg. The second-quarter earnings season starts next week.
“Folks are perhaps salivating a bit about some of the prospects of earnings,” said Barry James, who manages $2 billion as chief executive officer at James Investment Research Inc. in Xenia, Ohio. “That combined with the fact that the market was down so much last week is offering an opportunity for the market to rebound this week.”
European Banks Rally
European stocks advanced as Banco Santander SA and Banco Popular Espanol SA led a rally in Spanish banks.
Earlier declines in global stocks came after a report showed German factory orders unexpectedly fell in May, the first time in five months, as demand for goods from Europe’s largest economy waned across the 16-nation euro region. The MSCI Asia Pacific Index retreated 0.7 percent, its first drop in three days.
Crude oil for August delivery gained $1.49, or 2.1 percent, to $73.47 a barrel in New York. The contract fell to its lowest level since June 8 yesterday and lost 8.7 percent in the previous six trading days. Prices have dropped 7.4 percent this year. Copper jumped 1.5 percent in New York, extending its three-day gain to almost 5 percent.
1 comment:
Interesting...thanks for the info.
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