U.S. stocks, Treasuries rise on Fed; euro gains on German data

U.S. stocks and Treasuries rose, as improving economic data offset concerns that the Federal Reserve will cut monetary stimulus as soon as next month. The euro strengthened after German business confidence climbed to the highest in more than 1 1/2 years.

The Standard & Poor’s 500 Index climbed 0.3% to an intraday record 1,803.08 at 2:58 p.m. in New York, headed for its seventh straight weekly gain. The Stoxx Europe 600 Index added 0.1% after earlier rising as much as 0.6%. The euro climbed 0.5% to $1.3549. The yield on 10-year Treasury notes fell 3 basis points to 2.75%. West Texas Intermediate oil lost 0.6%.

U.S. data yesterday showed weekly jobless claims fell to the lowest level since September and a confidence survey indicated American consumers became less pessimistic this month. Germany’s Ifo business climate index climbed more than predicted in November, exceeding all 43 economist forecasts in a Bloomberg News survey. European Central Bank President Mario Draghi said policy makers will announce parameters for bank stress tests by the end of January.

“There’s really no deterrent for the market to move forward,” Karyn Cavanaugh, a vice president and market strategist at ING U.S.Investment Management in New York, said in a phone interview. Her firm oversees $196 billion. “There’s not really any bad news. We have a little bit of a pullback and then people jump in and say, ’Hey, I want a piece of this.’”

Weekly Rally

The S&P 500 erased its decline for the week and headed for a record close. The gauge is poised to extend its longest weekly winning streak since February. The Dow Jones Industrial Average gained 0.2% today after closing yesterday above 16,000 for the first time. It has rallied seven straight weeks, the best streak since January 2011.

Minutes of the Fed’s October meeting released Nov. 20 showed officials may reduce their $85 billion a month of bond- buying if the economy improves as anticipated. Stimulus from the Fed has helped the S&P 500 soar 166% since its March 2009 low. The index rallied 26% this year, poised for its best annual performance in a decade.

David Tepper, the hedge-fund manager who runs Appaloosa Management LP, said stock markets are not inflated as economies in the U.S., Europe and China are on “firm ground.” He said that while he remains bullish on U.S. stocks, markets may fall 5% to 10% when the Fed curbs its monthly stimulus program. He said his firm recently bet against U.S. Treasuries as a hedge.

Bubble Talk

“I know there’s talk about bubbles, this is not one,” Tepper said in an interview with Bloomberg Television’s Stephanie Ruhle at the Robin Hood Investors Conference in New York yesterday. United Continental Holdings Inc. climbed 3.7% after Tepper said that his “big play in the market” is airlines.

Time Warner Cable Inc. surged 10% to a record after people with knowledge of the matter said Comcast Corp. and Charter Communications Inc. have discussed a joint bid for the company. Foot Locker Inc. rallied 4.6% after it posted higher-than-estimated quarterly earnings. Ross Stores Inc. plunged 5.4% after cutting its fourth-quarter earnings forecast.

In Europe, Whitbread Plc and Daily Mail & General Trust Plc gained more than 3% after banks raised their stock ratings. Rhoen-Klinikum AG fell 3.3% after saying its second-biggest shareholder sued to block the sale of 43 clinics to Fresenius SE’s Helios unit. TUI Travel Plc and Eurazeo SA lost more than 4.6% after investors sold shares.

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