U.S. Stocks Gain on Earnings; Portugal Bonds Fall, Aussie Rises
A trader with Getco Securities LLC, works on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg
March 25 (Bloomberg) -- Moritz Kraemer, managing director of European sovereign ratings at Standard & Poor’s, discusses the outlook for the sovereign debt ratings of Greece and Portugal once full details of the European Stability Mechanism, the euro area's permanent rescue fund, are disclosed. Kraemer speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
March 25 (Bloomberg) -- Christopher Verrone, lead technical analyst at Strategas Research Partners, talks about outlook for the Standard & Poor's 500 Index and the copper market. Verrone spoke yesterday with Adam Johnson at the Strategas Global Macro Conference in New York. They spoke on Bloomberg Television's "Fast Forward." (Source: Bloomberg)
U.S. stocks gained, extending a weekly rally, as forecasts at Oracle Corp. and Accenture Plc beat estimates and economic growth was revised higher. Portugal bonds fell after S&P downgraded the debt, while Australia’s currency touched a record versus the dollar as commodities rose.
The S&P 500 climbed 0.5 percent to 1,316.05 at 3:06 p.m. in New York. The MSCI World Index of stocks in 24 developed markets rose for a seventh day, its longest streak in nine months. Portugal’s 10-year bond yield jumped to a euro-era record. Australia’s dollar strengthened as much as 0.8 percent to $1.0294. The Swiss franc fell versus all 16 most-traded peers and the euro weakened against 12. Ten-year Treasury yields climbed 4 basis points to 3.45 percent.
The S&P 500 has rebounded almost 5 percent from its 2011 low last week as concern eased that the global economy would be hurt by Japan’s worst earthquake on record and uprisings in the Middle East and northern Africa. The benchmark measure of U.S. stock options headed for its biggest seven-day drop 2008 as demand for protection against further declines subsided.
“Despite the global macro uncertainties, company fundamentals are leading investors to bid the market higher,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $5.2 billion. Oracle’s forecast “is a good signal for the technology sector, and so we think there will be ongoing strength in earnings for those companies.”
S&P 500, VIX
The S&P 500 advanced for the third day and extended its weekly gain to almost 3 percent. The Chicago Board Options Exchange Volatility Index, also known as the VIX, has tumbled 39 percent since March 16.
Stock also gained today after the Commerce Department said the economy grew 3.1 percent in the fourth quarter. The revised increase in gross domestic product compares with a 2.8 percent estimate issued last month, the figures showed.
Stocks maintained gains after the Thomson Reuters/ University of Michigan final index of consumer sentiment decreased to 67.5 from 77.5 in February. The preliminary estimate issued earlier this month was 68.2. The median forecast of 67 economists surveyed by Bloomberg News projected a reading of 68.
The MSCI Asia Pacific Index advanced 0.8 percent and the MSCI Emerging Markets Index climbed 0.8 percent. The Stoxx Europe 600 Index rose 0.1 percent and is up 3.1 percent since March 18, extending its biggest weekly rally in six months.
Oracle Rallies
Oracle, the world’s biggest supplier of database software, rallied 2.1 percent after saying earnings will increase amid a boom in demand, while Accenture, the second-largest technology- consulting company, jumped 4.3 percent after predicting better- than-estimated sales. SAP AG, the world’s largest maker of business-management software, advanced 1.9 percent. Infosys Technologies Ltd., India’s second-largest software-services provider, climbed 5.3 percent, the most since July 2009.
Ten-year Portuguese bond yields surged as much as 14 basis points to 7.80 percent after S&P joined Fitch Ratings in cutting the nation’s creditworthiness as European Union leaders met to discuss ways to resolve the region’s debt crisis.
The nation’s two-year yields rose 37 basis points to 7.07 percent and jumped 73 basis points in the week, while the extra yield investors demand to hold the 10-year securities instead of benchmark German bunds rose 9 basis points today to 451 basis points.
Default Swaps
The cost to protect U.S. corporate bonds from default was little changed as economic growth outweighed the downgrade of Portugal’s debt. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, rose less than half a basis point to a mid-price of 95 basis points, according to index administrator Markit Group Ltd.
Default swaps on Tokyo Electric Power Co. increased 82 basis points to 352 after Japan’s nuclear regulator said one reactor core at the quake-damaged Fukushima Dai-Ichi power plant may be cracked and leaking radiation.
Australia’s dollar rallied against 14 of 16 major peers, gaining more than 1.3 percent versus the Norwegian, Swedish and Swiss currencies. Natural gas, cattle, hogs and sugar climbed at least 1.5 percent to lead gains in commodities in the Thomson Reuters/Jefferies CRB index. New Zealand’s dollar climbed 0.6 percent versus the U.S. currency after central bank Governor Alan Bollard said the nation’s economy will get a boost from earthquake reconstruction next year.
The franc depreciated 0.4 percent against the euro, and 1.2 percent versus the dollar. The Swiss central bank said that while borrowing costs can’t remain near zero over the coming years, the inflation outlook hasn’t changed “significantly” since the previous quarterly assessment in December.
Crude oil for May delivery fluctuated, recently slipping 0.1 percent to $105.45 a barrel in New York.
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