U.S. stocks gain, Treasuries fall on retail sales as yen weakens

U.S. stocks and the dollar rose while Treasuries slid as retail sales data reinforced signals the economy is expanding moderately. European shares climbed to the highest level since May as German investor confidence topped estimates, while gold weakened.

The Standard & Poor’s 500 Index added 0.3% at 4 p.m. in New York, erasing an earlier loss, while the Stoxx Europe 600 Index advanced 0.6%. The yield on 10-year Treasuries rose nine basis points to 2.71%. The Bloomberg U.S. Dollar Index added 0.5% and the yen fell at least 0.3% versus all of its major peers. Gold lost 1%, halting a four-session rally. Germany’s benchmark 10-year bund yield gained 11 basis points to 1.81%.

U.S. retail sales rose for a fourth consecutive month in July, showing American households are regaining momentum as employment climbs. The ZEW Center for European Economic Research’s index of investor and analyst expectations rose to 42 in August, more than the 39.9 median forecast of economists in a Bloomberg survey. Japanese Prime Minister Shinzo Abe is mulling a tax cut for companies, the Nikkei newspaper reported, citing unidentified government officials.

“The general tenor of economic news has been somewhat positive and so perhaps there are some bargain hunters who are coming into the market after some days of correction,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said by phone. His firm oversees $211.5 billion. “I don’t know that we’re going to have a roaring recovery anytime soon, but the economy does seem to be advancing, slowly but certainly advancing, and that I think has sunk in finally.”

The S&P 500 erased earlier losses of as much as 0.4%, extending to a ninth day a trend where it reached its lowest point before noon, data compiled by Bloomberg show. The gauge rallied an average of 0.45% from its morning low to the close during the eight days through yesterday.

Financial Stocks

Hewlett-Packard Co. rose 2.1% after being added to Citigroup Inc.’s focus list. Bank of America Corp. and Citigroup jumped more than 0.7% after analyst Dick Bove said the stocks would double. D.R. Horton Inc. and PulteGroup Inc. dropped more than 1.5% as homebuilders slid amid rising interest rates. U.S. Airways Group Inc. sank 13% after the Justice Department recommended blocking a planned merger with American Airlines.

Apple Inc. rallied 4.8%, giving technology shares the biggest gain among 10 groups in the S&P 500, after billionaire investor Carl Icahn disclosed a “large position” in the stock. Icahn said in a Twitter post that Apple shares are extremely undervalued and the company should conduct a large buyback. The company will unveil a new iPhone at a Sept. 10 event, according to a person familiar with its plans.

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