U.S. Markets Wrap: S&P 500 climbs to highest in almost a year

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Published: September 14,2009

(Bloomberg) — U.S. stocks gained, sending the Standard & Poor’s 500 Index to its highest level in almost a year, as gains in utility, financial and industrial shares helped the market overcome an early slump.

The dollar declined to the weakest level against the euro this year. Treasury 10-year notes fell for the first time in four sessions, and crude oil dropped.

Avery Dennison Corp., the world’s largest label maker, and Sealed Air Corp.,the producer of Bubble Wrap, rallied at least 5.8 percent following a “buy” recommendation from Bank of America Corp. analysts. AES Corp. led a group ofutilities to the biggest gain in three weeks after the Wall Street Journal reported China’s sovereign wealth fund may buy a stake. E*Trade Financial Corp. jumped after Citigroup Inc. upgraded the shares.

The Standard & Poor’s 500 Index climbed 0.6 percent to 1,049.34, the highest close since Oct. 6. The Dow Jones Industrial Average increased 21.39 points, or 0.2 percent, to 9,626.8. Equities extended a global slide earlier amid escalating trade tensions between the U.S. and China.

“Any companies that don’t sell a lot of goods to China are certainly on the ‘buy’ list this morning,” said David Rolfe, who oversees $500 million as chief investment officer for Wedgewood Partners in St. Louis. “What we’re seeing is a relatively soft reach for defensive stocks, given the trade-war chatter.”

The dollar declined against the euro as borrowing costs at a record low encouraged investors to sell the greenback and buy higher-yielding assets outside the U.S.

Pound Drops

Sterling fell from near a five-week high versus the dollar as a report raised speculation that the U.K.’s housing slump will resume next year. New Zealand’s dollar was the biggest loser versus its U.S. counterpart among major currencies as the nation’s retail sales unexpectedly declined in July.

“The low interest-rate structure for many years to come in the U.S. is going to start undermining the dollar,” David Bloom, the global head of foreign-exchange strategy at HSBC Holdings Plc in London, said in an interview on Bloomberg Television.

The dollar lost 0.4 percent to $1.4621 per euro, from $1.4571 on Sept. 11. It earlier reached $1.4653, the weakest level since Dec. 18. The yen slid 0.2 percent to 90.91 against the dollar after appreciating to 90.21, the strongest level since Feb. 12.

Treasuries Decline

Treasury 10-year notes fell amid speculation that the rally that pushed yields to the lowest levels in two months can’t be sustained.

The difference in yields between two- and 10-year notes widened the most in more than a week as longer-maturity debt led the losses. Ten-year note yields touched the lowest level since mid-July last week as Treasury sales of $70 billion in notes and bonds posted higher-than-forecast demand. The benchmark note had gained for five consecutive weeks.

“The market got a little over the top last week,” said James Combias, the New York-based head of Treasury trading at Mizuho Securities USA Inc., one of the 18 primary dealers required to bid at Treasury auctions.

The yield on the benchmark 10-year note climbed eight basis points, or 0.08 percentage point, to 3.42 percent, according to BGCantor Market Data. The 3.625 percent security fell 20/32, or $6.25 per $1,000 face amount, to 101 22/32.

Crude oil fell for a second straight session as refineries idle units for maintenance and investors bet that U.S. fuel inventories may climb as consumption declines.

Gasoline, Heating Oil

U.S. refiners perform repairs and upgrades in September and October as gasoline demand falls and before heating-oil use rises. U.S. supplies of distillate fuel, a category that includes heating oil and diesel, climbed to the highest level since 1983, an Energy Department report showed last week.

“The fundamentals for oil are bearish,” said Stephen Schork, the president of consultant Schork Group Inc. in Villanova, Pennsylvania. “The driving season is over, heating- oil demand has yet to pick up and refineries are going into turnarounds, which means a lot of demand for crude oil will be offline. If there is a correction, it’s going to happen now.”

Crude-oil futures for October delivery fell 43 cents, or 0.6 percent, to $68.86 a barrel on the New York Mercantile Exchange, the lowest since Sept. 4. Prices have climbed 54 percent this year.

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