U.S. stocks advance with commodities while Treasuries retreat

U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding following its longest losing streak of the year, and commodities advanced after jobless claims unexpectedly decreased. Treasuries fell.

The S&P 500 climbed less than 0.1% to 1,693.53 at 2:50 p.m. New York time following a five-day slump. The index pared a gain of as much as 0.7% amid concern lawmakers will fail to reach a budget compromise to avert a government shutdown. Stocks slumped in China and rallied in Japan while Europe’s benchmark index closed little changed. The S&P GSCI gauge of 24 commodities gained 0.5%, with copper adding 0.7%. Ten-year Treasury yields increased 1.5 basis points to 2.64% after falling for four days.

Initial jobless claims dropped by 5,000 to 305,000 last week. The government’s final estimate of U.S. growth showed that the economy expanded at a 2.5% annualized rate, unrevised from the previous report and signaling the nation was weathering federal budget cutbacks and higher taxes. President Barack Obama and congressional Republicans are debating the U.S. federal budget in a confrontation that risks a government shutdown within days.

“Both are good reports because it verifies that the economy is growing and unemployment is going down,” said Douglas Cote, chief market strategist at ING U.S. Investment Management in New York, in a telephone interview. His firm oversees $190 billion. “What we’re seeing is the fundamentals keep marching forward in the U.S.”

Budget Debate

House Republican leaders offered a proposal today to increase the U.S. debt ceiling that drew protests from some members as a dispute over federal spending risks a government shutdown in four days. Republican leaders are preparing for what House Speaker John Boehner last month called a “whale of a fight” on the debt limit. They think they would win public support for pairing spending cuts with the increase in the debt cap rather than risking a government shutdown over the budget on Oct. 1.

The S&P 500 advanced after closing at the lowest level in more than a week. The index had fallen 1.9% over the previous five days after closing at an all-time high on Sept. 18. It’s up 19% for the year and 5.5% for the third quarter.

Gauges of telephone, technology, health-care and consumer shares led gains in nine of the 10 of the main industry groups in the S&P 500 today while utility shares fell had the biggest declines.

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