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.”
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.
Bed Bath & Beyond Inc. gained 4.3% after raising the low end of its earnings forecast. Apple Inc. added 0.5% as Morgan Stanley said iPhone demand is “tracking significantly ahead of expectations.” Eli Lilly & Co. fell 3.7% after its experimental drug ramucirumab failed to meet its goals for treating breast cancer in a late-stage trial. Hertz Global Holdings Inc. sank 17%, the most in two years, after cutting its forecasts.
The yield on 10-year Treasury notes has fallen from a two- year closing high of 2.99% on Sept. 5 after the Federal Reserve last week said it will continue with its $85 billion in monthly bond purchases, surprising investors who expected the central bank to begin tapering its stimulus.
Fed Bank of Richmond President Jeffrey Lacker said in Stockholm that the size of the Fed’s balance sheet increases the risks and the costs of policy errors. Fed Bank of Minneapolis President Narayana Kocherlakota, a voter on policy next year, said the Fed must do “whatever it takes” to strengthen a job market that is healing too slowly.
Japanese Prime Minister Shinzo Abe will announce an economic stimulus package on Oct. 1 at the same time as his decision on whether to raise the country’s sales tax, ruling Liberal Democratic Party tax panel chief Takeshi Noda told reporters today. The nation plans to pledge to promptly start a study on cutting the effective corporate tax rate, Kyodo News reported, without citing anyone.
The Topix climbed to 1,220.49 at the close in Tokyo, its highest since July 23.
The yen briefly pared declines versus the dollar after an advisory panel for Japan’s Government Pension Investment Fund said the administration should review its portfolio. Takatoshi Ito, an economist who leads the panel, said in an interview earlier this week that there “was a consensus” to reduce the fund’s allocation to government bonds.
Japan’s currency weakened 0.5% to 98.93 per dollar, after sliding as much as 0.7% before the pension fund announcement. It was down 0.2% at 133.42 per euro. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, gained 0.3%.
The MSCI Emerging Markets Index fell 0.4%, paring its quarterly gain to 6.7%.
The Shanghai Composite Index slumped the most in more than a week as companies linked to the city’s free-trade zone led declines amid concern recent gains were excessive. Taiwan’s TWSE Index dropped 1.2% and Poland’s WIG20 Index jumped 1.2%.
Copper for three-month delivery on the London Metal Exchange gained for a second day, climbing 0.7% to $7,251.00 a metric ton, after jumping 0.7% yesterday. The metal rose 7.4% this quarter.
West Texas Intermediate crude for November delivery rose for the first time in six days, climbing 0.2% to $102.85 a barrel on the New York Mercantile Exchange. WTI closed yesterday at the lowest settlement since July 3.
Italy’s 10-year bond yields increased 9.8 basis points to 4.34% before the country auctions as much as 6 billion euros ($8.1 billion) of debt tomorrow.
Trading volume for shares in the Stoxx Europe 600 Index was 24% greater than the average of the past 30 days. The gauge has surged 9.8% this quarter, on course for the biggest gain in four years.
Ladbrokes Plc sank 7.6% as the U.K. gambling operator said 2013 operating profit for the digital unit will be below analysts’ estimates. Thomas Cook Group Plc slid 6.6% after the U.K. tour operator said winter bookings have started more slowly than last year.
Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, surged 6.7% after reporting quarterly profit that topped estimates for the first time this fiscal year. Alcatel-Lucent SA rallied 6.3% as people with knowledge of the matter said Nokia Oyj, which is set to become a manufacturer focusing on wireless networks after the sale of its handset business, is evaluating a linkup with the French company. Nokia was little changed in Helsinki trading.