U.S. stocks and commodities advanced before Alcoa Inc.’s earnings report, while the yen weakened to the lowest since April 2009 after the Bank of Japan’s unprecedented stimulus measures last week.
The Standard & Poor’s 500 Index gained 0.4% at 3:39 p.m. in New York, reversing an earlier decline of 0.3%. Japan’s currency sank 1.8% to 99.32 per dollar, while the Nikkei 225 Stock Average jumped to a 4 1/2-year high. The Stoxx Europe 600 Index gained 0.2%. The S&P GSCI gauge of 24 commodities jumped 0.7% as oil, copper and wheat rose. South Korea’s won slid to the weakest level in eight months.
Alcoa is scheduled to kick off the U.S. first-quarter earnings season today. Income at S&P 500 companies probably fell 1.8% in the first three months of the year, the first year-over-year drop since 2009, analyst estimates compiled by Bloomberg show. Industrial production in Germany rebounded in February, the Economy Ministry said today.
Today’s reversal “continued a pattern, which has shown for quite some time now, which is any weakness is met with buying at some point of the day,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.5 billion in assets, said in a telephone interview. “There are people who are afraid of missing out further rallies.”
BioCryst Pharmaceuticals Inc. surged 10% as China expedited the approval of its anti-influenza drug Peramivir. Lufkin Industries Inc., a maker of oil-well pumps, jumped 38% as General Electric Co. agreed to buy the company. Johnson & Johnson declined 1.5% after JPMorgan Chase & Co. cut the stock’s rating.
Alcoa, the first Dow member to publish results each quarter, jumped 1.6% to $8.38 today. The company will report an 8-cent a share profit after the close of regular trading, according to the average of 18 analysts’ estimates. That would be two cents less than the earnings it posted in the first quarters of 2010 and 2012.
The S&P 500 fell 1% last week as U.S. payrolls had the smallest gain in nine months in March while other reports showed manufacturing and services industries expanded less than forecast. The index climbed to an all-time high of 1,570.25 on April 2.
“Earnings clearly are going to be the driver for a lot of volatility in the next couple of weeks,” Omar Aguilar, the San Francisco-based chief investment officer of equities at Charles Schwab Investment Management said in a telephone interview. The firm had $219.3 billion in assets under management as of Dec. 31. “The consensus is that we’re going to have a pretty diverse and poor earnings season. I think we’ll probably see a lot of surprises on the positive side, which is good.”
The S&P GSCI climbed for the first time in seven days. Wheat jumped 1.9% after China said it purchased almost 1 million metric tons of U.S. grain. China bought the soft red winter wheat last week, state-owned researcher Grain.gov.cn said in an e-mailed report today, without saying where it got the information.
West Texas Intermediate rose 0.7% after the biggest weekly drop in six months as militants and government forces clashed in Nigeria and talks between Iran and world powers failed to make progress. Natural gas tumbled 1%, reversing an earlier rally of as much as 1.3%, amid forecasts of warmer weather in the eastern U.S. that would limit demand for the heating fuel.
Gold futures declined for the fourth time in five sessions, slipping 0.2%, as the dollar’s advance reduced the appeal of the metal as an alternative investment.
The yen weakened 1.8% to 99.32 per dollar. The currency depreciated against all of its 16 major peers. BOJ officials said last week they will boost monthly bond purchases to 7.5 trillion yen ($80 billion), exceeding the 5.2 trillion yen forecast by economists surveyed by Bloomberg News.
The yen has slumped 21% in the past six months, the worst performance of 10 developed market currencies tracked by the Bloomberg Correlation Weighted Indexes.
The cost of insuring against losses on Portugal’s sovereign debt with credit-default swaps increased 31 basis points to 428, the highest since Jan. 2. The PSI-20 Index of stocks fell 1.4% as Banco Espirito Santo SA and Banco Comercial Portugues SA declined in Lisbon trading.
The country’s Constitutional Court blocked a plan to suspend some payments to state workers and pensioners, leaving the government needing to find more spending cuts to meet the terms of the country’s international bailout.
The benchmark 10-year Treasury yield rose three basis points to 1.74%.
The MSCI Emerging Markets Index fell 0.2%. The Shanghai Composite Index lost 0.6% and Taiwan’s Taiex Index tumbled 2.4%, the most in 10 months, as China reported more infections from a deadly bird influenza and trading resumed after four-day weekend. South Korea’s Kospi sank 0.4% and the won slid 0.8% as the risk of conflict with North Korea spurred capital outflows.