BLBG: U.S. Stocks Rebound From 9-Week Low on Durable Goods Data
U.S. stocks rose, with the Standard & Poor’s 500 Index (SPX) rebounding from a nine-week low, as orders for durable goods climbed in May and the People’s Bank of China said it will keep money-market rates at reasonable levels.
The S&P 500 climbed 0.9 percent to 1,587.08 at 9:32 a.m. in New York. The S&P 500 sank 2.1 percent last week as Federal Reserve Chairman Ben S. Bernanke said the central bank may start paring quantitative-easing measures this year.
“QE lifted all boats,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Pension A/S in Copenhagen, wrote in an e-mail. “Equally, its removal will shake all markets. The recent comments from central-bank officials show that they are a bit scared about the consequences of their own words and do not want to see a cold-turkey reaction in markets in the context of a still-fragile world economy.”
The S&P 500 (SPX) dropped 1.2 percent yesterday as Chinese equities entered a bear market amid concern a cash crunch will hurt growth. The index pared an earlier drop of as much as 2 percent as Richard Fisher, president of the Fed Bank of Dallas, and Minneapolis Fed President Narayana Kocherlakota emphasized that U.S. monetary policy is still accommodative.
China’s central bank will keep money-market rates at a reasonable level and seasonal forces that have driven them up will fade, Ling Tao, deputy director of the PBOC’s Shanghai branch, said at a briefing in Shanghai today. The overnight repurchase rate dropped 47 basis points to 6 percent, according to a daily fixing compiled by the National Interbank Funding Center. It reached a record 12.85 percent on June 20.
The Shanghai Composite Index (SHCOMP) closed 0.2 percent lower today, paring an earlier plunge of as much as 5.8 percent.
‘Manipulated Markets’
“We are in one of the most manipulated markets in recent times, so it’s only logical that the adjustment of the expected quantitative-easing path causes serious tremors in pretty much all markets,” Bahrke said.
While investors in U.S. stocks have suffered losses amid signs the Fed will pare stimulus measures, the declines look small when compared with the rout elsewhere in the world. U.S. shares have dropped at a slower pace than those in Asia and Europe since May 22, when Bernanke signaled that the central bank could taper quantitative easing as the economy improves.
The S&P 500 fell 4.6 percent from its May high through the end of last week. That compares with 9.7 percent for the Stoxx Europe 600 Index and 12 percent for the MSCI Asia Pacific Index.
‘Safe Haven’
“The U.S. is regarded as a safe haven and as an economy that’s just beginning to get up and running, which has produced this relative outperformance in stocks in the short term,” said Nick Skiming, who helps manage about $2 billion at Ashburton Ltd. in Jersey, the Channel Islands.
Bookings for U.S. goods meant to last at least three years climbed 3.6 percent for a second month, the Commerce Department reported today in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 3 percent increase. Excluding transportation equipment, where demand is volatile month to month, orders advanced 0.7 percent, also topping projections.
Home prices climbed more than forecast in the 12 months through April, rising by the most in more than seven years and showing further strength in the U.S. housing market.
Separate reports at 10 a.m. may show sales of new homes rose to a 460,000 annualized pace in May, the highest since July 2008, while consumer confidence declined from a five-year high this month, according to separate surveys of economists.
To contact the reporters on this story: Tom Stoukas in Athens at astoukas@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
