U.S. stocks extend gains after rally as gold, crude oil tumble

U.S. shares rallied for a second day following the biggest jump since January and gold plunged to a three-month low as lawmakers discussed a potential agreement to extend the nation’s borrowing authority. Treasuries climbed while the yen weakened and oil slid.

The Standard & Poor’s 500 Index added 0.6% to 1,701.83 at 2:33 p.m. in New York after jumping 2.2% yesterday. The Stoxx 600 Europe Index gained 0.4% and the benchmark index for emerging markets extended its two-day gain to 1.8%. U.S. 10-year Treasury yields were little changed at 2.68% while the dollar and yen weakened against major peers. Corn slid to a three-year low on concern demand may shrink if the government scales back the biofuel mandate. Gold futures fell 2.4% to $1,265.40 an ounce, while oil lost 1.2% on forecasts for rising North American production.

The S&P 500 erased losses since the start of the partial government shutdown began on Oct. 1 and is up 0.7% for the week. U.S. Democrats and Republicans were moving toward an agreement to extend the nation’s borrowing authority before an Oct. 17 deadline even as they remained at odds over terms for ending a partial government shutdown. JPMorgan Chase & Co. and Wells Fargo & Co. started the earnings season for banks. Confidence among American consumers fell to a nine-month low in October amid the partial government shutdown and debt-ceiling debate.

‘Market Volatility’

“We continue to look at the overall situation in Washington and see how that’s evolving,” Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors said in a phone interview from Wilmington. His firm oversees about $20 billion. “I suspect we may still be at least several days away from getting any sort of final resolution and it may create some market volatility as we go forward.”

The S&P 500 jumped 2.2% yesterday, the most in nine months, as lawmakers moved closer to a debt-ceiling deal.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index of decreased to 75.2 this month from 77.5 in September. Economists in a Bloomberg survey projected a drop to 75.3, according to the median estimate.

JPMorgan was little changed after reporting its first quarterly loss under Chief Executive Jamie Dimon amid a $7.2 billion charge to cover the cost of litigation and regulatory probes. Earnings adjusted for one-time items were $1.42 a share, compared a $1.30 average of 20 analysts surveyed by Bloomberg. Wells Fargo & Co. lost 0.4% after its earnings results showed weakness in new mortgage lending.

With few economic reports available during the shutdown, investors are watching third-quarter corporate earnings. Profits for companies in the S&P 500 probably increased 1.4% during the three months while sales rose 2%, according to analysts’ estimates compiled by Bloomberg.

‘Major Accidents’

House Republicans offered a plan to raise the U.S. debt limit and end a partial government shutdown that would require the president to accept policy conditions attached to a spending measure, said two congressional aides.

Republicans sent a list of policy options to the White House following a meeting yesterday, said the aides, who spoke on condition of anonymity. President Barack Obama has insisted that he won’t accept conditions for ending the shutdown, which is in its 11th day.

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