Stocks advance amid corporate earnings optimism while yen falls

Stocks rose, snapping a two-day slide, amid optimism that U.S. corporate earnings will extend a third straight year of growth. The yen weakened on speculation the Bank of Japan will expand stimulus.

The Standard & Poor’s 500 Index added 0.3% to 1,460.95 as of 4 p.m. in New York and the Stoxx Europe 600 Index closed at the highest in more than 22 months. The VIX, the benchmark gauge of U.S. stock options, rebounded after dipping beneath its lowest closing level in five years. The yen weakened against all 16 major peers. Ten-year Treasury yields decreased for a fourth straight day.

Seagate Technology Plc. and Danaher Corp. paced gains in the S&P 500 after saying quarterly results will top forecasts. Fourth-quarter profit at companies in the S&P 500 probably increased 2.9%, according to analyst estimates compiled by Bloomberg, extending a three-year expansion while marking the second-slowest quarterly growth since 2009.

“This is what can happen when investors are able to focus on earnings and not politicians,” Brian Jacobsen, who helps oversee about $212 billion as chief portfolio strategist at Wells Fargo Advantage Funds, said in an interview in New York.

The S&P 500 fell for a second day yesterday after finishing last week at a five-year high. Industrial, health-care and raw- material shares helped lead gains in the 10 main industry groups in the S&P 500 today. Trading volume was about almost 10% higher than the 30-day average at this time of day.

Market Leaders

Seagate Technology jumped after sales rose to at least $3.6 billion in the fiscal second quarter, exceeding an earlier forecast for $3.5 billion as the company maintained share in the computer hard-drive market. Danaher advanced after the maker of microscopes and water-treatment systems said earnings will exceed its forecast range.

Boeing Co. led the Dow Jones Industrial Average higher, rebounding from a 4.6% plunge over the previous two sessions after a fire aboard its 787 Dreamliner. Qatar Airways Ltd., one of the biggest customers for the new jet, said heightened scrutiny of the model won’t damp the carrier’s purchase plans. MasterCard Inc., the second-biggest U.S. payments network, rose after Goldman Sachs Group Inc. raised its rating. Apollo Group Inc., the biggest U.S. for-profit college, slid after net income slid on a drop in new enrollment.

VIX Rebounds

The VIX, as the Chicago Board Options Exchange Volatility is known, rose 1.7% to 13.85, erasing earlier losses and snapping a six-day slump. The index earlier today touched 13.22, the lowest level since 2007.

Alcoa Inc. was little changed after reporting late yesterday that fourth-quarter sales fell to $5.9 billion from $5.99 billion, beating the $5.6 billion average of 11 estimates. Profit excluding one-time items was 6 cents a share, matching the average of estimates compiled by Bloomberg. The largest U.S. aluminum producer said demand for the metal in China will gain 11% this year.

More than two shares advanced for every one that declined in the Stoxx 600 as telecommunications companies and banks led gains. The index climbed to the highest level since Feb. 18, 2011. The volume of trading in Stoxx 600 shares was 70%  greater than the 30-day average, Bloomberg data show.

Stake Sale

Delta Lloyd NV jumped 6.6%, the biggest gain in six months, after Aviva Plc sold its 19.4% stake in the Dutch insurer for 433.8 million euros ($568 million). J Sainsbury Plc dropped 2.9% after the U.K.’s third-largest supermarket chain reported the slowest sales growth in eight years.

Natural gas tumbled 3.3% to a 15-week low, leading losses in commodities, on speculation that unusually mild weather next week will curtail demand for the heating fuel. Oil slipped 5 cents to $93.10 a barrel after a government report showed that U.S. crude and fuel inventories surged as production advanced to a 19-year high.

The yen weakened 0.8% to 87.78 per dollar, ending a two-day advance. It declined 0.7% per euro. The 17-nation shared currency dropped 0.2% to $1.3060.

Treasury 10-year note yields fell one basis point to 1.86%, declining for a fourth straight days. The U.S. auction of $21 billion in 10-year notes was met with weaker-than-average demand. The notes drew a yield of 1.863%, compared with a forecast of 1.849% in a Bloomberg News survey of eight of the Federal Reserve’s primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.83, compared with an average of 3 for the previous 10 sales.

Portugal Bonds

The yield on Portugal’s 10-year bonds rose five basis points to 6.51% on bets the nation will sell bonds for the first time since its international bailout after Ireland sold debt yesterday.

The MSCI Emerging Markets Index added 0.4%, snapping a three-day decline. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.9% as automakers advanced. Credit Suisse Group AG recommended buying shares in China’s carmakers.

Egypt’s EGX 30 Index gained 1.1% to the highest since October. Qatar said yesterday it doubled deposits at Egypt’s central bank, helping ease a currency crisis. Benchmark gauges in Hungary and Israel rose more than 2%, while Brazil’s Bovespa increased 0.7%.

Bloomberg News

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