U.S. stocks rose as investors speculated the worst three-day selloff since 2011 was overdone. Oil extended losses and 30-year Treasury yields fell below 3% for the first time since 2013.
The Standard & Poor’s 500 Index (CME:SPZ14) increased 0.3% to 1,880.86 at 10:08 a.m. in New York, after tumbling 4.8% over the previous three sessions. The Stoxx Europe 600 Index dropped 0.3%, paring an earlier loss of 1.4%. Treasury 30-year yields slid 4 basis points to 2.98% amid bets the Federal Reserve will push back the timing on raising interest rates. The dollar (NYBOT:DXZ14) strengthened against most of its major peers. Brent crude (NYMEX:SCZ14) declined 2.3%.
About $744 billion was erased from U.S. equities since Oct. 8 amid concern slower global growth could hurt the economy as the Fed withdraws stimulus efforts. Data in Europe today showed consumer prices in Sweden and Spain fell, U.K. inflation slowed to a five-year low and German investor confidence decreased for a 10th month. Citigroup Inc. rallied 2.9% as bond-trading revenue climbed and lending improved.
“The market will rebound because it has been a pretty fierce selloff and investors reached an extreme risk aversion,” said Thomas Thygesen, head of cross-asset strategy at SEB AB in Copenhagen. “Concerns that slower global growth would affect the U.S. have been overdone. We know the Fed will only adjust interest rates once the time is right.”
The S&P 500 fell 6.8% from its Sept. 18 record as of yesterday, paring its gains this year to 1.4%. The index dropped to its lowest level since May, below its 200-day average for the first time in two years. The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX, rose 16% to its highest level since June 2012. The measure soared 63% in the past three days.
The selloff accelerated late yesterday as airlines sank on Ebola concerns and energy shares plunged after Brent crude dropped to the lowest in almost four years.
“Yesterday’s late-day selloff was bordering on the irrational,” John Canally, an economic strategist at LPL Financial Crop. In Boston, said in a phone interview. “There was no news or earnings, and thin trading. We’ve just gone through a period since late July since we’ve gotten any news on earnings, which is what ultimately drives stock performance. It’s encouraging that the first few earnings reports we’ve gotten have been solid.”
Investors are watching earnings reports today after Alcoa Inc. unofficially kicked off the U.S. results season last week. Some 53 S&P 500 companies are scheduled to release earnings this week, according to data compiled by Bloomberg. Profit for members of the index probably rose 4.8% in the third quarter and sales gained 4.2%, analysts projected.
Chipmaker Intel Corp. reports after the close.
Europe’s Stoxx 600 pared losses after touching the lowest level since February. The gauge is more than 8% below the June 10 close, which was a six-year high.
Iliad SA rallied 11% as it abandoned a plan to buy a majority stake in T-Mobile US Inc. after an improved bid was spurned by the wireless carrier’s owner Deutsche Telekom AG. Burberry Group Plc dropped 3.9% after the U.K.’s largest luxury-goods maker forecast downward pressure on profit margins.
The volume of Stoxx 600 shares changing hands today was 24% greater than the 30-day average, according to data compiled by Bloomberg.
The euro (CME:E6Z14) fell 0.8% to $1.2652 after the ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to minus 3.6 in October, the first negative reading since November 2012.
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