Dow climbs past 13,000 as commodities advance; Treasuries drop

July 27 (Bloomberg) -- The Dow Jones Industrial Average climbed above 13,000 for the first time since May, while Treasuries fell and commodities gained amid speculation European policy makers may take steps to ease the debt crisis.

The Dow average rose 1.6 percent to 13,091.63 at 2:06 p.m. in New York, poised for the biggest two-day jump since December. The Standard & Poor’s 500 Index rallied 1.9 percent to 1,385.92. Ten-year Treasury note yields added 10 basis points to 1.54 percent, the most in three months. S&P’s GSCI gauge of 24 raw materials increased 1.1 percent. A measure of U.S. corporate debt risk slid for a third day. The euro pared its advance, gaining 0.2 percent to $1.2307.

Stocks extended gains after two central bank officials said European Central Bank President Mario Draghi will hold talks with Bundesbank President Jens Weidmann in an effort to overcome the biggest stumbling block to a new raft of measures including bond purchases. German Chancellor Angela Merkel and French President Francois Hollande said their countries are “bound by the deepest duty” to keep the euro area intact and that they will do “everything” necessary to protect the single currency.

“Any ECB actions to buy bonds extend the lifeline to the region as the political leaders grapple for other solutions,” John Augustine, who helps manage $25 billion as chief market strategist at Cincinnati-based Fifth Third Bancorp, said in a phone interview. “This is what the market is focused on.”

U.S. stocks yesterday snapped four days of losses, sending the S&P 500 up 1.7 percent, after Draghi pledged to preserve the euro. He suggested policy makers may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the currency bloc.

U.S. Economy

Gross domestic product for the U.S. economy rose at a 1.5 percent annual rate after a revised 2 percent gain in the prior quarter, Commerce Department figures showed. The median forecast of economists surveyed by Bloomberg News called for a 1.4 percent increase.

Merck & Co. and Amgen Inc. added at least 3.8 percent after earnings beat estimates. Expedia Inc., an online-travel company, surged 20 percent after boosting its dividend.

Facebook Inc. tumbled 11 percent after reporting slower sales growth and narrower profit margins. Operating margin, excluding certain costs, was 43 percent in the second quarter, a drop from 53 percent a year earlier, amid a fourfold surge in sales and marketing expenses, the company said yesterday.

Starbucks Tumbles

Starbucks Corp., the world’s largest coffee-shop chain, plunged 10 percent after forecasting fourth-quarter profit that missed estimates. Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, tumbled 11 percent after cutting its full-year outlook, citing Europe’s economic crisis.

The Stoxx Europe 600 Index rose 1.3 percent today and posted an eighth weekly advance. Total SA, France’s largest oil producer, climbed 3.4 percent as second-quarter profit rose. Barclays Plc surged 8.7 percent after reporting earnings that beat analysts’ estimates on growth in retail and investment banking.

Italy’s 10-year yields fell below 6 percent for the first time in a week. Spanish 10-year yields fell 18 basis points to 6.74 percent.

The Markit CDX North America Investment Grade Index , a credit-default swaps benchmark used to hedge against losses on corporate debt or to speculate on creditworthiness, decreased 1.7 basis points to a mid-price of 109.6 basis points, according to prices compiled by Bloomberg.

The MSCI Emerging Markets Index climbed 2.7 percent, heading for the biggest gain since June 29. South Korea’s Kospi index led gains among emerging-market gauges, climbing 2.6 percent, the most since January. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 2 percent. Benchmark indexes added 0.4 percent in Russia and South Africa.

Bloomberg News

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