Stocks rallied, sending the Dow Jones Industrial Average above its highest close in five years, and commodities rose as a jump in housing starts and drop in jobless claims bolstered optimism in the world's largest economy. The yen fell for the first time in three days.
The Dow climbed 107.13 points to 13,618.36 and the Standard & Poor's 500 Index gained 0.7 per cent to 1,483.19 at 1:55 p.m. in New York, above the highest closing levels since December 2007 for both. Oil surged 1.5 per cent to $US95.69 a barrel to pace gains in commodities. The yen slid 1.6 per cent versus the dollar as Japan's economy minister said the currency has more room to decline. The euro strengthened against all 16 major peers as the Swiss franc slid to the weakest level since the central bank introduced a currency cap in 2011. Yields on 10-year Treasuries rose seven basis points to 1.89 per cent.
Stocks jumped as applications for jobless benefits fell in the week ended Jan. 12 to the lowest level in five years, and housing starts climbed 12.1 per cent last month, government data showed. Economy Minister Akira Amari said the yen is still in the process of correcting from excessive gains and that his remarks earlier this week on yen weakness were misinterpreted.
"We're getting signs that both housing and the labor market are improving," said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $US170 billion. "Housing, in particular, is a huge number. It's positive for the economy, it's positive for earnings and for the stock market."
Intel Corp., Walt Disney Co. and Home Depot Inc. rose at least 1.3 per cent to pace gains in the Dow Jones Industrial Average. PulteGroup Inc. jumped 5 per cent to lead an S&P gauge of homebuilders to the highest level since 2007. The Chicago Board Options Exchange Volatility Index, the benchmark gauge of S&P 500 options prices known as the VIX, slid 0.9 per cent to the lowest level on a closing basis in more than five years.
US housing starts climbed to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists and the most since June 2008, the Commerce Department reported today. Jobless claims decreased by 37,000 to 335,000 in the week ended Jan. 12, Labor Department figures showed. Economists forecast 369,000 claims, according to the median estimate in a Bloomberg survey.
CBS Corp. jumped 8.7 per cent after saying it will convert its outdoor advertising division into a real estate investment trust and seek a buyer for the European and Asian parts of the business.
BlackRock Inc., the world's biggest money manager, gained 4.7 per cent after reporting adjusted fourth-quarter earnings of $US3.93 a share, compared with the $US3.71 a share average estimate of six analysts surveyed by Bloomberg.
Bank of America Corp. lost 4.6 per cent after reporting earnings that decreased 64 per cent. Of the 52 companies that posted quarterly results so far, 71 per cent topped analysts' profit projections, according to data compiled by Bloomberg.
Almost four shares rose for every one that declined in the Stoxx 600. Carrefour SA, Delhaize Group SA and Associated British Foods Plc led gains among retailers. Carrefour, France's biggest retailer, climbed 6.1 per cent and Delhaize, the owner of Food Lion supermarkets in the US, rallied 10 per cent as fourth-quarter revenue increased. AB Foods advanced 3.2 per cent as the U.K. sugar producer that owns Primark clothing stores reported a 10 per cent gain in first-quarter sales.
The yen slid more than 0.9 per cent against its 16 major peers. The 17-nation euro gained 0.5 per cent to $US1.3357 as it strengthened against all 16 counterparts after Spain's borrowing costs decreased at a 4.5 billion bond auction.
Switzerland's franc fell as much as 1 per cent to 1.2490 per euro, the weakest since May 2011. The currency declined against 15 of 16 major peers.
Major currencies have been roiled this week as policy makers stepped up warnings on swings in exchange rates. Thailand's finance minister today said the baht is "not at a good level," while a Russian central bank official yesterday said the world is on the brink of a "currency war." A JPMorgan index of volatility for currencies of Group of Seven nations jumped 5.9 per cent to 8.9 today, the highest level since August.
The MSCI Emerging Markets Index rose 0.2 per cent. India's Sensex gained 0.7 per cent as foreign investors added to their holdings of domestic shares for a 13th straight day. Russia's Micex Index was little changed and Brazil's Bovespa gauge gained 0.5 per cent. The Shanghai Composite Index slid 1.1 per cent before a report on fourth-quarter growth figures tomorrow.