S&P 500 extends record as gold, silver climb on Yellen remarks

Economic Data

Jobless claims in the week ended Nov. 9 declined 2,000 to 339,000 from a revised 341,000 the week before that was higher than initially reported, the Labor Department said today. The median forecast of 51 economists surveyed by Bloomberg called for a drop to 330,000. Applications for five states were estimated because of the Veterans Day holiday-shortened week, the Labor Department said.

The S&P 500 has surged more than 25% in 2013, poised for its best yearly gain in a decade. The benchmark index trades for 16.9 times its companies’ reported earnings, the highest valuation since May 2010.

‘Increasingly Enthusiastic’

Value remains in the U.S. stock market even after this year’s rally, according to Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc.

Price-earnings ratios are lower now than the last time stocks were near these levels, Cohen said in a Bloomberg Radio interview with Tom Keene late yesterday. Janet Yellen is one of the finest policy analysts in the U.S. and deserves to be confirmed as the next chairman of the Fed, said Cohen. She forecasts the S&P 500 will reach 1,900 by the end of 2014, a 6.6% gain from yesterday’s close.

“Companies right now are increasingly enthusiastic about the dynamism in the economy,” said Cohen. “There’s value in the market right now. The U.S. economy will likely grow faster next year.”

The difference between Treasury five-year and 10-year notes yields widened to the most in more than two years. The yield curve measuring the difference between the two. reached 1.37 percentage points, on speculation the Fed’s target interest rate may be lower for longer under a Yellen-led Fed.

Bond Sale

Thirty-year bonds pared gains after a $16 billion sale of the debt drew lower-than-average demand. The bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.16, versus an average of 2.48 at the past 10 auctions. Inflation control is important and the central bank’s stimulus program “will not continue indefinitely,” Yellen testified at her confirmation hearing to lead the Fed.

The Stoxx Europe 600 Index advanced 0.8% for the largest gain in a month. Ophir Energy Plc jumped 10%, the biggest gain in the regional benchmark, after Singapore’s state- owned Pavilion Energy Pte said it would pay $1.3 billion for a 20% stake in three gas blocks off the shore of Tanzania in east Africa.

Bouygues SA and Zurich Insurance Group AG added added 6.2% and 2.5% respectively after earnings beat estimates. BNP Paribas SA climbed 2.9% after saying it plans to buy the 25% it doesn’t own in its consumer- banking unit BNP Paribas Fortis SA from Belgium for 3.25 billion euros. RWE AG fell 5.1% after Germany’s second-largest utility said profit next year will almost halve.

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