U.S. stocks rose, paring the biggest weekly drop for the Standard & Poor’s 500 Index since November, amid better-than-estimated earnings and Group of 20 nation talks aimed at bolstering the global economy. The yen weakened, gold climbed above $1,400 an ounce and oil advanced.
The S&P 500 gained 0.9% at 4 p.m. in New York, trimming its weekly loss to 2.1%. The Dow Jones Industrial Average’s gain was limited to less than 0.1% as International Business Machines Corp. plunged the most since in eight years after posting disappointing earnings. Japan’s currency tumbled at least 0.9% against all 16 major peers. Ten-year Treasury yields climbed two basis points to 1.70%. Gold for immediate delivery rose for a fourth day. The pound weakened as Britain lost its top credit grade at Fitch Ratings.
Capital One Financial Corp., Chipotle Mexican Grill Inc. and Microsoft Corp. climbed at least 3.4% to help lead the market higher after reporting quarterly results that beat estimates. G-20 finance chiefs handed Japan leeway to reflate its stagnant economy by indicating its fresh round of monetary stimulus doesn’t contravene a pact to avoid a currency war.
“Earnings have more of an impact on the market at this time of the year,” Lawrence Creatura, a Rochester, New York- based fund manager at Federated Investors Inc., which oversees about $380 billion, said by phone. “Macro issues are taking a bit of a backseat as investors stop to listen to what management teams have to say. Today’s reports have been mainly good with the exception of IBM.”
Volume of S&P 500 stocks was 17% higher than the 30- day average for this time of day. U.S. options contracts expire today, leading investors to adjust their holdings of some stocks.
The S&P 500 retreated 3.3% from its record close on April 11 through yesterday, spurring concern over what UBS AG strategist Jonathan Golub called a “spring break” in equities. Stocks began short-term declines in April of each of the last three years. The benchmark measure surged as much as 136% from a 12-year low in 2009 as the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
Boeing Co. rallied 2.1% after winning U.S. approval to return to service with a redesigned lithium-ion battery, more than three months into the government’s longest grounding of a commercial model in the jet age.
IBM slid 8.3%, the most since April 2005, after the computer-services provider posted profit that trailed projections for the first time since 2005, hurt by a hardware slump and failure to sign customers to contracts. IBM, which accounts for 10% of the price-weighted Dow average for its heaviest weighting, by itself took 131.7 points off the 30- stock gauge today, trimming the average’s advance to less than 14 points.
“IBM’s drop is weighing down on the Dow today,” Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which oversees about $130 billion, said by telephone. “Capital is selectively flowing to where growth is the best. We’re seeing a little of bit growth here in the U.S. and that’s helping investor returns overall.”
General Electric Co., the largest maker of jet engines, fell 4.1% and McDonald’s Corp., the biggest restaurant chain by sales, declined at least 2% after profit matched analysts’ estimates.
Earnings beat estimates at 72% of the 103 companies in the S&P 500 that posted results so far this season, while less than 50% exceeded revenue projections, according to data compiled by Bloomberg.
The Stoxx Europe 600 Index climbed 0.5% for the first advance in six days. The gauge lost 2.5% this week, the biggest drop since November.
Kazakhmys Plc surged 24% and Vedanta Resources Plc rallied 6.1% as a gauge of European mining companies rebounded from a 3 1/2-year low. L’Oreal SA rose 4.3% after the world’s largest cosmetics maker reported an increase in first-quarter revenue.
The euro was little changed $1.3056, while climbing against 11 of 16 major peers. German Finance Minister Wolfgang Schaeuble said the European Central Bank should reduce liquidity in the euro area, according to Wirtschaftswoche magazine.
The pound weakened against 14 of 16 major peers, losing more than 0.8% against the South Korean won and Brazilian real and slipping 0.3% to $1.5229. Fitch lowered the U.K. to AA+ from AAA on a weaker economic and fiscal outlook. It cut its growth projection and forecast that debt would peak at 101% of gross domestic product in the fiscal year 2015-2016.
The MSCI Emerging Markets Index climbed 1.3%, rebounding from the lowest level since November. The gauge has fallen 4.3% this year, compared with a 6.2% increase in the MSCI World Index of developed countries.
Fund flows into developed-market equities beat emerging- market peers for a ninth week, Citigroup Inc. analysts led by Markus Rosgen wrote in a report, citing EPFR data. Inflows into developed equities were dominated by the U.S. and Japan, while emerging-market equities saw $964 million outflows, they wrote.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong jumped 3.1% today. China’s economy may rebound in the second and third quarters of the year, Zhu Baoliang, head of the State Information Center’s economic forecast department, said at a forum in Beijing. Taiwan’s Taiex Index climbed 1.8% after Taiwan Semiconductor Manufacturing Co., the world’s largest contract maker of chips, forecast record quarterly sales.
China’s yuan strengthened against the dollar after the central bank signaled plans to widen a trading band that’s been limiting appreciation since October. Thailand’s baht advanced to a 16-year high, reversing earlier losses, even after central bank Governor Prasarn Trairatvorakul said the currency has started to move beyond its fundamentals.
The yen depreciated for a fourth day against the dollar, sliding 1.4% to 99.55. It declined 1.4% against the euro. Meeting for the first time since the Bank of Japan unleashed new measures aimed at delivering 2% inflation within two years, G-20 finance ministers and central bankers said today in Washington that those actions are “intended to stop deflation and support domestic demand.” They echoed their promise of February that nations will refrain from “competitive devaluation.”
Gold for immediate delivery pared gains after climbing as much as 2.6% to $1,426.05 an ounce. It fell 9.1% on April 15, the most in three decades. Prices are down about 5.8% this week, heading for the fourth weekly decline on concern European governments will follow Cyprus in selling reserves.
European Union emission permits rose 2.9% after yesterday’s 12% gain. The allowances dropped 42% on April 16 and 17 when the European Parliament rejected a proposed change to the region’s emissions-trading law that would have curbed the supply of permits temporarily.
The won rose versus 15 of 16 major counterparts, climbing to the strongest level versus the yen since October 2008. South Korean Finance Minister Hyun Oh Seok said Japan’s weakening currency is hurting his country’s economy more than North Korean threats.