Stocks rebound in US, Europe

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WallStreet1234 Reuters. A Wall Street sign is pictured outside the New York Stock Exchange in New York.

New York - US stocks rose, with the Standard & Poor’s 500 Index rebounding from the biggest drop in three weeks, and European shares climbed while Spain’s two-year yield slid to a record.

Emerging-market stocks fell with industrial metals after China’s service industries dropped.

The S&P 500 added 0.3 percent and the Stoxx Europe 600 Index gained 0.7 percent at 10:38 a.m. in New York.

The MSCI Emerging Markets Index lost 1.1 percent.

The yield on Spain’s two-year note slid as low as 1.05 percent, the lowest since Bloomberg started tracking the data in 1993.

The yen strengthened against 12 of 16 major peers.

Natural gas, zinc, lead and aluminum lost at least 1.3 percent to lead commodities lower while gold rose for a second day after capping its worst yearly loss since 1981.

Oil fell 0.8 percent to a one-month low.

US stocks fell yesterday, snapping a streak of rallies on the first session of the year since 2009, as investors sold shares following the best annual gain since 1997.

Spanish bonds gained today as a report showed unemployment in the nation dropped the most in six months.

Federal Reserve Chairman Ben S. Bernanke is due to speak today at an economics conference in Philadelphia.

“When there’s such a large move in the market like yesterday, there’s a little bit of a knee-jerk reaction in the morning,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a telephone interview.

“It kind of entices people into the market,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a telephone interview.

“When I look around there’s not a lot of places to go with stocks. If we shake people up in the masses like we did yesterday I think it’s OK.”

 

Fed, Stocks

 

The Fed’s decision to maintain the pace of bond buying during 2013 helped the S&P 500 jump 30 percent last year.

Fed officials said they will reduce their monthly purchases of assets to $75 billion from $85 billion starting this month, citing faster-than-estimated economic growth.

The S&P 500 finished the year at an all-time high for the first time since 1999.

The Dow average climbed 27 percent in 2013 for its best performance since 1995.

Equity returns will slow this year, Wall Street strategists forecast.

The S&P 500 will end 2014 at 1,950, according to the average of 20 estimates compiled by Bloomberg.

That represents a 5.5 percent gain from the end of 2013.

Analysts estimate earnings for S&P 500 companies in the fourth quarter grew by 5.2 percent, according to data compiled by Bloomberg.

Alcoa will unofficially begin the reporting season when it discloses results after the markets close on January 9.

 

Market Leaders

 

Gauges of financial, health-care and industrial shares rose at least 0.4 percent for the biggest gains among the 10 major industry groups in the S&P 500.

FireEye Inc. soared 28 percent after acquiring Mandiant Corp. in a $1.05 billion deal that consolidates providers of services that protect computer networks against hackers and spies.

Sprint Corp. fell 3.4 percent after Stifel Nicolaus & Co. downgraded the mobile-phone operator to sell from hold.

Today’s gain in the Stoxx 600 trimmed this week’s decline to less than 0.1 percent.

Trading volumes were 4.8 percent above the 30-day average for Stoxx 600 companies and in-line for S&P 500 companies, according to data compiled by Bloomberg.

The Stoxx 600 jumped 17 percent last year for its biggest annual rally since 2009.

 

‘Good Surprise’

 

Next Plc jumped 9.9 percent after the UK’s second-largest clothing retailer increased its profit forecast and said it planned to pay a special dividend. Remy Cointreau SA slipped 2.2 percent after Frederic Pflanz resigned as chief executive officer.

“Next is a good surprise for the market and the UK economy,” said Pierre Mouton, who helps oversee $6 billion as a portfolio manager at Notz, Stucki & Cie. in Geneva.

“Otherwise, we are seeing a quiet start to the year. My gut feeling is, this year, we will see the market moving a lot around the pace of tapering in the US”

Bernanke is scheduled to make remarks today at the American Economic Association in Philadelphia, four weeks before his term expires on January 31.

Fed officials said December 18 they would trim monthly purchases of bonds to $75 billion from $85 billion starting this month.

 

Emerging Markets

 

About three shares fell for each that rose in the MSCI Emerging Markets Index, extending this week’s loss to 1.8 percent, the worst week in two months.

The Hang Seng China Enterprises Index slid 2.6 percent, while equity gauges in Shanghai, Seoul, Jakarta, South Africa and Turkey declined more than 1 percent.

China’s non-manufacturing purchasing managers’ index fell to 54.6, the lowest since August, from 56 in November.

Data on January 1 showed the official gauge for factory output dropped more than economists projected to a four-month low.

An HSBC Holdings Plc and Markit Economics Ltd. index of Chinese manufacturing published yesterday slipped to 50.5 from 50.8 in November, matching the median estimate in a Bloomberg survey.

“You cannot count on China to contribute to global growth now as the economy is still under structural adjustment,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai.

“There’s no excitement in the macroeconomy and in this case it’s difficult for the stock market to have good performance.”

 

Spain Yields

 

Spain’s 10-year yield fell to as low as 3.89 percent, the least since May 2010.

Unemployment declined 107,570 last month, according to Ministry of Labor in Madrid, the biggest decrease since June.

The additional yield investors demand to hold Spanish 10- year debt over similar-maturity German bunds dropped below 200 basis points for the first time since May 2011.

The Italy-Germany spread also slipped below 200 basis points, for the first time since July 2011.

The rate on US 10-year Treasuries was just below 3 percent, after jumping to 3.05 percent yesterday, the most since July 2011.

The yield on German 10-year bunds was little changed at 1.95 percent, while the rate on similar-maturity UK gilts was at 3.03 percent.

The yen strengthened 0.4 percent to 104.37 per dollar, extending this week’s gain to 0.8 percent.

Japan’s currency advanced 0.9 percent to 142.05 per euro.

The euro fell 0.5 percent to $1.3611.

“The market, from a positioning perspective, is very short of yen and vulnerable to thin liquidity,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong.

Copper dropped 1 percent to $7,318.75 a metric ton and zinc declined 2.3 percent to $2,028.25 a ton.

Gold rose for a second day, rising 0.8 percent to $1,234.73 an ounce, heading for the biggest weekly gain since October. - Bloomberg News



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