U.S. stocks rallied and Treasuries fell after housing starts and earnings from Coca-Cola Co. and Johnson & Johnson beat estimates, while gold rebounded from its biggest slump in three decades. European stocks fell while the yen and dollar weakened.
The Standard & Poor’s 500 Index gained 1.4% at 4 p.m. in New York, posting its second-best gain of the year and rebounding from the biggest drop in five months. The Stoxx Europe 600 Index fell 0.8%. Japan’s currency dropped against all 16 major counterparts, while the dollar weakened against 14. Treasury 10-year note yields climbed five basis points to 1.73%, the first increase in four days. Gold futures added 1.9% and palladium and platinum climbed more than 3.5%.
Gold recovered from a two-year low after the biggest selloff since 1980 as investors including BlackRock Inc.’s Catherine Raw and Sri Lankan central bank Governor Ajith Nivard Cabraal said the decline led to a buying opportunity. Coca-Cola reported higher sales volumes in Latin America, while new drugs helped J&J beat projections. U.S. housing starts jumped as multifamily projects rose to the highest level in more than seven years, while cheaper gasoline led to a drop in consumer prices.
“The outlook for gold for us is really positive in the long term,” Raw, a fund manager in London at BlackRock, which oversees about $3.8 trillion globally, said in an interview today on Bloomberg Television with Francine Lacqua. “The probability of inflation over the next five years is higher not lower than it was last year. Other things such as cash losing money, the Cyprus event, savings being targeted means people are looking for alternatives.”
Stocks rebounded even after the International Monetary Fund trimmed its global growth forecast and urged European policy makers to use “aggressive” monetary policy as a second year of contraction leaves the euro area’s recovery lagging behind the rest of the world.
The global economy will expand 3.3% this year, less than the 3.5% forecast in January, after 3.2% growth in 2012, the IMF said today, cutting its prediction for this year a fourth consecutive time. The IMF sees the 17-country euro area shrinking 0.3%, compared with a 0.2% retreat in January, with France joining Spain and Italy in contracting.
Gold for June delivery pared gains after climbing as much as 3.2% to $1,404.20 an ounce. Futures sank 13% in the previous two days. The drop was triggered by speculation that Cyprus would sell its gold reserves, leading other European central banks to follow suit, Goldman Sachs said in a report today.
Spot gold is down about 28% from its record high in September 2011. During its 12-year rally, gold has gained more than 500%. On an inflation-adjusted basis, it’s 43% lower than the record high.
Palladium advanced 3.7% to $677.58 an ounce and aluminum gained 2.6% to $1,914 a metric ton. Palladium declined 11% in the previous two days and platinum dropped 8.5%. Brent crude fell below $100 a barrel for the first time since July on signs economic growth will slow, curbing demand. West Texas Intermediate oil was little changed before a report that may show a U.S. supply gain.
Gauges of commodity, technology, financial and consumer- staples companies rose at least 1.5% to lead the rebound today after the S&P 500 sank 2.3% yesterday. The index extended losses late yesterday as explosions near the finish line of the Boston Marathon killed three people and left at least 128 in the hospital.
Coca-Cola rose 5.7%, the most in four years, after profit topped estimates as Latin American sales volume rose and the company announced a deal to sell some bottling distribution rights. BlackRock Inc., the world’s largest asset manager, had earnings of $3.65 per share, compared with an estimate of $3.57. The shares increased 1.3%. Goldman Sachs Group Inc. retreated 1.6% after the Wall Street bank that generates the highest percentage of its top line from trading reported revenue from that business fell more than its rivals.
Earnings topped analysts’ profit estimates at 71% of the 41 companies in the S&P 500 that have released quarterly results so far in the reporting season, with 56% exceeding revenue projections, according to data compiled by Bloomberg. First-quarter earnings at S&P 500 members are forecast to decline 1.4% from a year earlier, estimates compiled by Bloomberg show, marking the first year-over-year decrease since 2009.
‘Met With Buyers’
Today’s advance trimmed the S&P 500’s retreat from a record on April 11 to about 1.3%.
“Over the last few weeks, every down move has been met with buyers that have come in,” Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp., said by telephone. His firm has $2.08 trillion in client assets. “People on the sidelines are waiting for a pullback to get into the market that they’ve missed for the past six months. We’re seeing more of that today.”
Housing starts climbed 7% to a 1.04 million annual rate, the most since June 2008, following a revised 968,000 annual rate in February that was larger than previously reported, according to Commerce Department figures. The median estimate of 80 economists surveyed by Bloomberg called for 930,000. Another report showed industrial production increased 0.4%, twice as much as forecast.
The cost of living in the U.S. declined in March for the first time in four months as cheaper gasoline and clothing kept inflation in check. The consumer-price index dropped 0.2% after a 0.7% jump in February, the Labor Department said today. The median forecast in a Bloomberg survey called for no change. The core measure, which excludes volatile food and energy costs, rose 0.1%, less than forecast.
The Stoxx 600’s decline extended the drop over three days to 2.3%. Michael Page International Plc slid 5% after the U.K. recruiter reported lower profit. LVMH Moet Hennessy Louis Vuitton SA retreated 3.8% as revenue growth slowed. Danone rallied 2.2% as the food company reported first-quarter sales growth that beat analysts’ estimates.
Confidence in Germany’s outlook fell more than economists forecast in April, according to the ZEW Center for European Economic Research.
The MSCI Emerging Markets Index rose for the first time in three days, adding 0.8%. Benchmark gauges in South Africa, Indonesia and India gained at least 1%.
India’s Sensex index jumped 2.1%, the most since September, on speculation declining commodity prices will help the government curb a record current-account deficit.
European Union emission permits fell the most ever after the European Parliament rejected a plan to reduce an oversupply in the world’s biggest carbon market. Carbon prices for December dropped as much as 45% to 2.63 euros a metric ton on ICE Futures Europe in London.
The yen declined 2% to 128.70 per euro after surging 3.5% during the previous two days. Japan’s currency dropped 0.9% to 97.63 per dollar. The dollar fell 1.1% to $1.3184 per euro, after gaining 0.6% yesterday. New Zealand’s dollar strengthened for the first time in three days, climbing 1.1% to 85.01 U.S. cents.
German 10-year bund yields rose three basis points to 1.28% and the rate on similar-maturity Italian bonds fell three basis points to 4.31%.