US stocks move higher with oil
US stocks rose on better-than- forecast earnings from companies including Pfizer Inc. and Valero Energy Corp, returning benchmark indexes to five-year highs. Oil helped lead a rally in commodities as global reports boosted economic confidence.
The Standard & Poor's 500 Index increased 0.4 per cent at 1:13 p.m. in New York. Oil climbed 1 per cent to $US97.37 a barrel and cotton rallied 1.9 per cent to send the S&P GSCI Index of commodities up 0.7 per cent. The euro strengthened 0.2 per cent, reaching its strongest level since 2011 against the dollar. Ten- year Treasury yields were at 1.98 per cent a day after rising above 2 per cent for the first time since April.
Profit beat the average analyst estimate at 75 per cent of the 175 companies in the S&P 500 that have posted results so far this reporting season. US home prices rose by the most in six years, the 20-city S&P/Case-Shiller index showed, while reports from Germany to Australia signaled improved global sentiment. Equities remained higher even as US consumer confidence fell more than forecast in January, reaching the lowest level in more than a year.
"The market's responding favorably to, and will continue to respond favorably to, the earnings reporting season because the majority of companies will beat expectations," Hank Smith, who helps oversee $US6.5 billion as chief investment officer of Haverford Trust Co. in Radnor, Pennsylvania, said in a phone interview. "The market is all about expectations."
The S&P 500 has more than doubled from a 12-year low in 2009 as corporate earnings have climbed for three years and the Federal Reserve has increased its bond purchases to keep interest rates low to spur growth. The S&P 500 is less than 4 per cent below its record of 1,565.15 set in October 2007 while the Dow Jones Industrial Average is less than 2 per cent from its all-time high.
Pfizer Inc. rallied 3.1 per cent after adjusted earnings per share beat projections and the drugmaker forecast higher-than- expected full-year profit. Energy shares climbed as Valero jumped 9.5 per cent after posting a 20-fold gain in earnings. Ford Motor Co. slid 5.6 per cent after saying it expects to lose about $US2 billion in Europe this year as a likely recession in the region continues to sap demand for cars.
D.R. Horton Inc. jumped 10 per cent to lead a rally in homebuilders after earnings more than doubled in its fiscal first quarter amid low mortgage rates and a shrinking inventory of existing residences.
The S&P/Case-Shiller index of property values increased 5.5 per cent from November 2011, the biggest year-over-year gain since August 2006, a report showed today in New York. The median projection of 30 economists surveyed by Bloomberg called for a 5.6 per cent advance.
The Conference Board's index of consumer confidence decreased to 58.6, the weakest since November 2011, from a revised 66.7 in December, figures from the New York-based private research group showed today, as higher payroll taxes took a bigger bite out of Americans' paychecks.
Oil touched $US97.82 a barrel, the highest intraday price since September. Silver, lead, cocoa and gold increased at least 0.5 per cent as 20 of 24 commodities in the S&P GSCI Index climbed, sending the gauge to the highest since October.
The US dollar fell against 15 of its 16 major counterparts as investors pared expectations that the Fed will signal a change to its asset-buying program at the end of a two- day meeting tomorrow. The Fed's latest round of bond buying will reach $US1.14 trillion before it ends the program in the first quarter of 2014, according to median estimates in a Bloomberg survey of economists.
"The Fed meeting will be, as always, very closely watched," Smith said. "The market's going to be very curious and read into any commentary as to if the Fed lets on as to when this non-traditional easing will start to end."
The Stoxx Europe 600 Index added 0.3 per cent, returning to an almost two-year high after slipping 0.1 per cent yesterday. Software AG tumbled 17 per cent after posting fourth-quarter earnings and sales that missed analysts' estimates.
Anglo American Plc advanced 3 per cent as JPMorgan Chase & Co. said the mining company's $US4 billion writedown was toward the bottom of its estimated range. The company said today that it will write down the sum because of additional costs at its Minas-Rio iron-ore project in Brazil.
German two-year notes rose for the first time in four days, sending the yield three basis points lower to 0.27 per cent, after the European Central Bank said it will lend banks 124.1 billion euros ($US166.7 billion) for seven days, little changed from the previous week.
The rate on two-year Italian debt fell four basis points to 1.53 per cent as borrowing costs fell at a government auction of bills.
India's rupee strengthened against 12 of 16 major currencies as the central bank cut borrowing costs and the amount of deposits lenders must set aside as reserves.
The MSCI Emerging Markets Index rose 0.7 per cent, snapping four days of losses. South Korea's Kospi index jumped 0.8 per cent. The Shanghai Composite Index climbed 0.5 per cent, extending gains from a low on Dec. 3 to more than 20 per cent, the threshold for a bull market.
Egypt's benchmark EGX 30 Index retreated 2 per cent after the country's main opposition bloc rejected talks with President Mohamed Mursi, signaling the nation's political crisis may be prolonged. The Tel Aviv 25 Index slipped 0.9 per cent after Bank of Israel Governor Stanley Fischer informed Prime Minister Benjamin Netanyahu of plans to step down on June 30.