U.S. shares rebound while oil, gasoline rally as gold tumbles

The Standard & Poor’s 500 Index (CME:SPZ13) rose following its first three-day slump since September, while gasoline and oil (NYMEX:CLF14) rallied and gold (COMEX:GCZ13) and silver slid. Emerging market stocks fell as a gauge of Chinese manufacturing missed estimates and the Federal Reserve said it may reduce stimulus.

The S&P 500 added 0.8% as of 3:01 p.m. in New York, rebounding from a 0.9% slide in the previous three sessions. The MSCI Emerging Markets Index sank 1.4% and Brazil’s real lost 1.5% versus the dollar to lead emerging market currencies lower. Ten-year Treasury yields reversed gains after rising to the highest since September while rates on German and British bonds jumped. Oil jumped the most in seven weeks and gasoline climbed to a two-month high, while gold futures reached the lowest price since July.

U.S. stocks rebounded after sliding yesterday when minutes from the Fed’s last meeting showed policy makers expected ongoing improvement in the labor market to “warrant trimming the pace of purchases in coming months.” U.S. reports today showed jobless claims slid more than forecast, while a gauge of manufacturing in the Philadelphia area trailed estimates. China’s manufacturing fell for the first time in four months, and the Bank of Japan left policy unchanged.

“After three consecutive negative days it’s reasonable to expect a breather,” Lawrence Creatura, a Rochester, New York- based fund manager at Federated Investors Inc., which oversees about $364 billion, said in a phone interview. “There is some good news in the labor report too in that it does indicate a degree of improvement in the labor market.”

Record, Retreat

The S&P 500 fell in the previous three sessions after reaching its latest record Nov. 15. The benchmark index is up more than 25% in 2013, poised for its best yearly gain in a decade. The index traded at 17 times its companies’ reported earnings at the last record, the highest valuation in more than three years.

Stocks have rallied this year, extending the S&P 500’s gain from its bear-market low in 2009 to 165%, amid growth in earnings and unprecedented monetary stimulus from the Fed. The Senate Banking Committee today voted 14-8 to approve Janet Yellen as the next chairman of the Fed, sending the nomination to the full Senate for approval.

Among U.S. stocks moving today, Johnson Controls Inc., the largest U.S. auto-parts maker, rallied as much as 7.6% to a record $51.90 a share after saying it will increase a stock- repurchase program by $3 billion and raise its dividend by 16% due to confidence in its outlook for fiscal 2014 and beyond.

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