S&P 500 rises above record close as euro gains with Italy bonds

Stocks climbed, with the Standard & Poor’s 500 Index returning above its record closing level, after U.S. home sales increased and investors speculated central banks will continue to stimulate the economy. The euro rose with Italian bonds as the country forms a government

The S&P 500 rose 0.8% to 1,594.12 as of 1:07 p.m. New York time, while the Stoxx Europe 600 Index climbed 0.5%. The euro strengthened 0.5% against the dollar and yields on Italian 10-year bonds fell 15 basis points to 3.91%. The Markit iTraxx Europe index of investment-grade company credit risk lost 4.8 basis points for a seventh straight decline, the longest streak since 2009. Corn, natural gas and wheat jumped more than 3% to lead commodity gains.

European Central Bank policy makers may cut interest rates this week, according to the majority of economists in a Bloomberg survey, while the Federal Reserve will consider renewing its commitment to bond-buying at a two-day meeting starting tomorrow. A gauge of U.S. homebuilder shares rallied for a seventh straight day after a report showed signs of further progress in the housing market.

“There’s just a positive tone to the market in part because recent lackluster economic trends have reinforced investors’ belief that the Federal Reserve will continue to press on the gas pedal,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $130 billion, said by telephone. “It’s just further evidence that this rally has been a highly caffeinated rally courtesy of global central banks, and their quantitative easing plans will continue.”

Approaching Record

The S&P 500 climbed 1.7% last week and is poised for a sixth straight monthly gain, its longest rally since 2009. Technology, commodity and utility companies led gains in all 10 of the main industries in the S&P 500 today. Hewlett-Packard Co., Microsoft Corp. and International Business Machines Corp. climbed more than 2% for the biggest gains in the Dow Jones Industrial Average.

Tenet Healthcare Corp. surged 7% as hospitals will get a pay raise from the U.S. government for treating patients in the nation’s Medicare program. Moody’s Investors Service Inc. and McGraw-Hill Cos. advanced after a group of investors agreed to drop their claims against the companies. Actavis Inc. and Valeant Pharmaceuticals International Inc. rose more than 3.5% as people familiar with the situation said the companies are in merger talks that have stalled.

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