SF: U.S. Stocks Gain on Economic Data as Treasuries Trim Early Drop
March 15 (Bloomberg) -- U.S. stocks rose, with the Standard & Poor's 500 Index returning to the highest level since 2008, as New York-area manufacturing grew and fewer Americans filed jobless claims. Treasuries pared losses after 10-year yields climbed to a four-month high. The euro rose.
The Standard & Poor's 500 Index added 0.3 percent to 1,398.43 at 10:35 a.m. in New York and the Dow Jones Industrial Average climbed above its highest close since the end of 2007. The 10-year Treasury yield was little changed at 2.27 percent after climbing for six straight days. The pound fell versus 15 of 16 major peers and borrowing costs rose at a 30-year bond auction after Fitch Ratings said Britain risks losing its AAA rating.
U.S. jobless claims dropped last week, matching the lowest level in four years, and manufacturing in the New York region expanded in March at the fastest pace since June 2010. The data fueled speculation that the Federal Reserve will not see a need for another round of bond purchases to bolster growth.
"The stock market is not terribly cheap, but reasonably priced," John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. "We're still in attractive area for long-term investors. The economy is steadily improving. If people focus on that, we might see some further strength in share prices."
Valuation Watch
The S&P 500 is trading for about 14.5 times its companies reported earnings, the highest valuation since July while still below the five-decade average multiple of 16.4. Financials, commodity producers and industrial companies led gains among the 10 main industry groups in the S&P 500 today.
Bank of America Corp., Intel Corp. and General Electric Co. led gains in the Dow.
Among European stocks, HeidelbergCement AG, the world's third-largest maker of cement, jumped 3.8 percent after predicting operating profit and sales will rise this year. Pernod-Ricard SA declined 2.6 percent as Groupe Bruxelles Lambert SA sold a 499 million-euro ($651 million) stake in the producer of wines and spirits.
The yield on the 10-year U.S. Treasury bond rose to as high as 2.35 percent, the most since Oct. 28. The average yield on 1,277 government debt securities in Merrill Lynch's Global Sovereign Broad Market Plus Index climbed to 1.743 percent yesterday from 1.647 percent on March 7. The yield was 2.274 percent a year ago.
Below Average Yields
While Treasury yields are rising, the 10-year rate is about 1.5 percentage points less than last year's high of 3.77 percent reached on Feb. 9. The yield averaged 3.87 percent in the past decade.
The 10-year U.K. gilt yield climbed four basis points to 2.38 percent, while sterling depreciated 0.2 percent against the euro. The U.K. sold 2 billion pounds ($3.1 billion) of bonds maturing in December 2042 at an average yield of 3.431 percent, up from 3.287 percent at an auction of similar-maturity debt in December.
The Spanish 10-year bond yield fell one basis point as the government sold 3 billion euros of bonds, compared with a maximum target of 3.5 billion euros it set for the sale. The bid-to-cover ratio for notes maturing in April 2016 was 4.13, compared with 2.21 when the notes were sold in January.
The 10-year French bond declined for the second day, with the yield rising five basis points to 2.98 percent, as the debt office auctioned sold 8.46 billion euros of notes, at the top end of the 8.5 billion euros targeted.
The Swiss franc strengthened 0.5 percent against the dollar and 0.3 percent versus the euro as the Swiss central bank kept its cap on the franc unchanged and said deflation still threatens the economy even as growth shows signs of stabilizing.
Swiss Central Bank
The Swiss National Bank, led by interim Chairman Thomas Jordan, maintained the franc ceiling at 1.20 francs per euro, as forecast by all 14 economists in a Bloomberg News survey. The Zurich-based central bank said in an e-mailed statement today that it also kept its benchmark interest rate at zero.
The MSCI Emerging Markets Index was little changed. The Shanghai Composite Index slipped 0.7 percent after foreign direct investment in China dropped for a fourth straight month, taking its two-decline to 3.3 percent, the most since Aug. 9. The BSE India Sensitive Index lost 1.4 percent, its first retreat in five days, as the central bank kept rates on hold.
--With assistance from Claudia Carpenter, Paul Dobson, Andrew Rummer, Daniel Tilles and Jason Webb in London and Lynn Thomasson in Hong Kong. Editor: Michael P. Regan
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net
