U.S. stocks rally as yen drops, Treasuries fluctuate before Fed

Market Leaders

General Electric Co., American Express Co. and UnitedHealth Group Inc. climbed at least 1.9% to lead gains in the Dow Jones Industrial Average. Flir Systems Inc. climbed 6.2% after Raymond James & Associates Inc. lifted its rating to strong buy. Walter Energy Corp. advanced 17% as Morgan Stanley said the coal miner’s shares may triple. Hormel Foods Corp. dropped 4% as the company cut its 2013 profit forecast.

Treasury 10-year note yields were down less than one basis point at 2.18% after climbing five basis points yesterday. The dollar was stronger against 11 of 16 major peers, while losing 0.3% to $1.3405 per dollar.

President Barack Obama said Fed Chairman Bernanke has stayed in his post “longer than he wanted,” one of the clearest signals the central bank chief will leave when his current term expires next year.

‘Outstanding Job’

“Ben Bernanke’s done an outstanding job,” Obama said in an interview with Charlie Rose that aired yesterday, when asked about nominating him for another term subject to Senate approval. “He’s already stayed a lot longer than he wanted or he was supposed to.”

Investors cut bond holdings to a near two-year low this month and bought stocks as expectations the Fed may remove monetary stimulus bolstered growth forecasts, a Bank of America Corp. survey showed.

A net 50% of 190 global fund managers, who together oversee about $572 billion, said they now hold fewer bonds than are represented in asset-allocation benchmarks, while the proportion who are overweight on stocks rose to 48% from 41% as they bought U.S. and European shares. Emerging- market equity holdings slumped to the lowest level since December 2008.

“Investors’ sentiment has been surprisingly resilient in recent weeks despite the jump in volatility in financial markets,” New York-based Michael Hartnett, chief investment strategist at Bank of America’s Merrill Lynch unit, wrote in a note to investors today. “While our fund-flows data shows bond capitulation, the survey shows that there has been no capitulation in equities in the U.S. and Europe.”

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