Global stocks rose the most in a month amid better-than-forecast U.S. earnings and industrial production, while the euro and Spanish bonds gained as two German lawmakers said the country is open to Spain seeking a precautionary credit line.
The MSCI All-Country World Index added 1.7 percent at 4 p.m. in New York as benchmark gauges in Spain and Italy surged at least 2.5 percent. The Standard & Poor’s 500 Index climbed 1 percent as Johnson & Johnson and Mattel Inc. advanced after reporting earnings, while Citigroup Inc. climbed as Vikram Pandit stepped down as chief executive officer. The euro rose 0.8 percent to $1.3051, while the dollar weakened versus 11 of 16 major peers. Cocoa and copper led commodities higher.
European stocks extended gains and Spanish bonds reversed earlier losses as Michael Meister and Norbert Barthle, officials within Chancellor Angela Merkel’s Christian Democratic bloc, indicated a reversal to German resistance to a full bailout for Spain. Earnings topped estimates at 73 percent of the 48 companies in the S&P 500 that released results so far.
“Investors are cycling back into risk as earning as well as economic numbers in the U.S. are somewhat better than expected,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $138 billion in client assets, said in a telephone interview. “As long as Germany will lend its balance sheet to distressed countries like Spain, then that will embolden investor sentiment.”
European shares rose earlier as German investor confidence increased for a second month in October, sending credit-default swaps on the nation’ssovereign bonds down three basis points to 41, the lowest since July 2011.
Another report showed U.S. industrial production increased a more-than-forecast 0.4 percent in September, partially reversing the prior month’s slump and indicating manufacturers are regaining their footing. Growth in the U.S. economy will probably pick up to 3.5 percent next year, reducing the unemployment rate to near 7 percent, Federal Reserve Bank of St. Louis President James Bullard said late yesterday.
The S&P 500 extended yesterday’s 0.8 percent rally. Some 84 companies in the benchmark index of U.S. stocks are releasing results this week, according to data compiled by Bloomberg.
Mattel surged after profit topped estimates amid gains in sales of Fisher-Price toys and American Girl dolls. Johnson & Johnson, the world’s biggest maker of health-care products, climbed as earnings beat estimates on demand for new prescription drugs and medical tools acquired with the Synthes Inc. purchase.