S&P 500 gains on Microsoft buyback as Treasuries rise, oil falls

‘Key Event’

The yield on 10-year Treasuries declined 1.4 basis points to 2.85%. The FOMC will probably cut monthly purchases of Treasuries to $35 billion from $45 billion and keep mortgage- bond buying at $40 billion at the meeting starting today, according to a Bloomberg News survey of economists earlier this month.

“Nobody’s going to make a major commitment until we get some color out of the Fed,” Eric Green, director of research and fund manager at Penn Capital Management, said by phone. The Philadelphia-based firm oversees about $7 billion. “Today is a throw-away day. Aside from company specific news, the overall market is probably just sitting, waiting to get some direction. This meeting will set the tone for the next few months most likely.”

A report today showed the cost of living in the U.S. rose less than forecast in August, with the consumer-price index increasing 0.1%, the least in three months, Labor Department figures showed. The median forecast in a Bloomberg survey of economists called for a 0.2% gain.

Summers Withdraws

Bonds rose yesterday after Lawrence Summers withdrew as a candidate for the position of Fed chairman. The former Treasury secretary would have tightened central bank policy more than Fed Vice Chairman Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll conducted last week. Bernanke’s term ends on Jan. 31.

The euro rose 0.4% to 132.57 yen and was 0.2% stronger at $1.3359.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 49.6 in September from 42 in August. Economists predicted a reading of 45, according to the median of 37 estimates in a Bloomberg News survey.

The S&P GSCI fell for the third day, the longest streak since Aug. 21, as West Texas Intermediate oil dropped 1.3% to $105.10 a barrel. U.S. Secretary of State John Kerry joined French and U.K. diplomats in calling for a United Nations resolution to eliminate Syria’s chemical arsenal, with the goal of forcing President Bashar al-Assad from power. Libya restored about 25% of its crude output following talks between the government and striking workers, while oil-export terminals in Mexico reopened as Ingrid weakened from a hurricane to a tropical depression.

Gold for immediate delivery slipped 0.1% to $1,311.69 an ounce after falling 1% yesterday.

www.bloomberg.com

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