July 22 (Bloomberg) -- Stocks, oil and copper rallied on improving profit forecasts at companies from United Parcel Service Inc. to AT&T Inc. and accelerating growth in European manufacturing and services industries. The euro strengthened and two-year Treasury yields increased from a record low. The Standard & Poor’s 500 Index jumped 2.3 percent to 1,094.08 at 11:13 a.m. in New York and the Stoxx Europe 600 Index climbed 1.9 percent, the biggest gains for both in at least a week. Oil topped $78 a barrel and copper rose for a fourth day, sending an index of commodities up the most since July 7. The euro surged 1.2 percent versus the dollar and yen. Two-year Treasury yields rose 2 basis points to 0.58 percent. U.S. equities rebounded from yesterday’s slide as Caterpillar Inc. and EBay Inc. also posted better-than-estimated earnings and home prices unexpectedly rose in May, outweighing Federal Reserve Chairman Ben S. Bernanke’s assessment that the economic outlook was “unusually uncertain.” The euro, which slid to a four-year low of $1.1877 in June, has risen almost 9 percent since amid optimism the region’s debt crisis is contained. “The earnings guidance from some of the bigger global companies is looking better,” said Mike Morcos, senior money manager at Old Second Wealth Management in Aurora, Illinois, which oversees about $1.1 billion. “The market is in a battle between fear and optimism, and today we have some positive news which indicate it may not all be doom and gloom.” S&P 500’s Rebound The S&P 500 has rallied more than 7 percent from a 10-month low earlier this month amid speculation that growth in earnings will signal a stabilizing economy. Of the 124 companies in the index that released second-quarter results since June 12, 85 percent have beaten the average analyst earnings estimate, according to data compiled by Bloomberg. Equities added to gains and Treasuries extended losses today after a National Association of Realtors report showed the median U.S. home price increased 1 percent last month to $183,700 from $181,800 in June 2009. UPS Leads Transports UPS, the world’s largest package-delivery company, surged 6.6 percent as growing overseas demand improves its earnings outlook. The shares led the Dow Jones Transportation Average to a 4.3 percent advance, the biggest since June 10. EBay rallied 5.8 percent, while AT&T climbed 2.9 percent and Qualcomm Inc. jumped 8.4 percent as the maker of chips for mobile phones predicted higher prices for devices that use its technology. More than 50 S&P 500 companies were scheduled to report results today. Goldman Sachs Group Inc. and Morgan Stanley led $14.2 billion in U.S. corporate bond sales yesterday in the busiest day in almost four months as yields on company debt fell to the lowest in six years. Goldman Sachs raised $3 billion in a two- part bond offering, its biggest since January 2009, according to data compiled by Bloomberg. Morgan Stanley also issued $3 billion of debt after it reported second-quarter earnings that surpassed analyst estimates. European Rally All 19 industry groups in the Stoxx 600 advanced after a composite index based on a survey of euro-area purchasing managers in manufacturing and service industries rose to 56.7 from 56 in June, according to Markit Economics. ABB Ltd., the world’s largest builder of electricity networks, gained 4.5 percent in Zurich after earnings beat estimates. Banks rallied, with HSBC Holdings Plc, Europe’s biggest lender, rising 2.5 percent. Banco Santander SA, Spain’s largest bank, climbed 2.7 percent. Gains were limited as Credit Suisse Group AG fell 1 percent after reporting a drop in profit at its investment banking unit. Bank of Ireland Plc and Allied Irish Banks Plc, the country’s two biggest banks, climbed at least 2 percent. Both are both set to pass the European Union’s stress tests on lenders, according to a person with direct knowledge of the matter. The cost of insuring against losses on European high-yield bonds fell to the lowest level in a month, according to traders of credit-default swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings decreased 7 basis points to 514, the lowest since June 21, according to JPMorgan Chase & Co. prices at 2 p.m. in London. Asian, Emerging Markets The MSCI Asia Pacific Index was little changed, rising less than 0.1 percent. The MSCI Emerging Markets Index rose 0.9 percent, after earlier dropping as much as 0.5 percent. The dollar weakened against 14 of its 16 most-traded peers, depreciating 1.2 percent to $1.2907 per euro. Copper climbed 3 percent to $3.1855 a pound in New York, the highest price since May. Gold for immediate delivery gained 0.9 percent to $1,195.80 an ounce. Crude oil rallied 2.7 percent to $78.66 a barrel in New York. Natural gas futures pared gains after the U.S. Energy Department released its weekly inventory report. Natural gas for August delivery rose 10.4 cents, or 2.3 percent, to $4.617 per million British thermal units on the New York Mercantile Exchange. --With assistance from Tim Catts and John Detrixhe in New York; Claudia Carpenter, David Merritt, Michael Patterson, Daniel Tilles, Abigail Moses, Joe Brennan and Alexis Xydias in London. Editor: Michael P. Regan, Stephanie Borise To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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