“They were great numbers relative to where we’ve been, but the question is whether they were too good, too fast in the eyes of the Fed,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said by telephone. His firm oversees $250 billion. “While we continue to make all-time highs, it continues to be live by the Fed, die by the Fed.”
Global stocks rose earlier as a report showed gross domestic product in Japan expanded an annualized 0.2% in the fourth quarter, the Cabinet Office said. A preliminary estimate had shown the world’s third-biggest economy contracted 0.4% in the period. China’s exports increased 21.8% in February from a year earlier, the customs administration said. That beat the 8.1% median estimate in a Bloomberg survey of economists.
Equities briefly pared gains after Italy’s credit rating was cut one level by Fitch Ratings. An inconclusive election in February produced political paralysis in the nation, threatening Italy’s ability to respond to a recession and the European debt crisis.
The Morgan Stanley Cyclical Index climbed for the fifth day. The gauge that tracks 30 U.S. companies tied to economic growth added 1.2%. The Chicago Board Options Exchange Volatility Index, known as the VIX, fell 3.4% to 12.62. The gauge has slumped 18% this week.
McDonald’s jumped 1.6% to $98.60, its highest level in almost a year. The world’s largest restaurant chain said sales at stores open at least 13 months fell less than analysts estimated in February as low prices kept consumers coming to restaurants amid a weak economy.
Citigroup added 3.3% to $46.50 as the third-largest U.S. bank sought Fed permission to repurchase $1.2 billion in shares a year after its previous request was rejected. The Fed said 17 of the 18 biggest banks could withstand a deep recession and maintain capital above a regulatory minimum.
Goldman Sachs, JPMorgan Chase & Co. and Morgan Stanley submitted more optimistic estimates of their capital strength and ability to avoid losses on trading and lending than Fed projections. The gap was widest for Goldman Sachs, which predicted its Tier 1 common ratio may fall as low as 8.6% in a sharp economic downturn, compared with the central bank’s 5.8% estimate.
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