SF: U.S. Stocks Gain With Commodities as Dollar Slides Before Fed
Sept. 11 (Bloomberg) -- U.S. stocks rose with commodities and the dollar weakened before a Federal Reserve policy meeting starting tomorrow. European shares recovered from early losses triggered when Burberry Group Plc said profit will disappoint.
The Standard & Poor’s 500 Index gained 0.4 percent at 10:48 a.m. in New York. Ten-year Treasuries fell for the first time in three days. The Stoxx Europe 600 Index rose 0.1 percent while Burberry tumbled 21 percent. The dollar weakened against all 16 major peers, while the euro gained 0.7 percent to $1.2842 after a German court said it won’t delay a decision tomorrow on the country’s role in a bailout fund. Natural gas, coffee and oil added more than 0.6 percent to lead commodities higher.
The Federal Open Market Committee will start a two-day meeting tomorrow amid speculation it will introduce a third round of asset purchases. Germany’s Federal Constitutional Court is due to rule tomorrow on participation in the 500 billion-euro ($640 billion) fund, while Greek politicians meet amid an impasse on spending cuts needed for a bailout. Spanish Prime Minister Mariano Rajoy said late yesterday he won’t allow the European Union or the European Central Bank to stipulate how the nation cuts its budget gap as a condition for buying its bonds.
“Everybody is waiting to see what the Fed and German court will do,” Greg Peterson, director of investment research at Ballentine Partners LLC in Waltham, Massachusetts, which has about $4 billion in assets, said in a telephone interview. “The Fed has come out and said that things are weakening and that they’re willing to act. Bernanke is really playing the steady course and emphasizing that they have more amo. I’m not sure they’re going to announce QE3 but they’re trending in that direction.”
Bernanke’s Concern
The S&P 500 rebounded following yesterday’s 0.6 percent drop. Fed Chairman Ben S. Bernanke said on Aug. 31 that the weak jobs market was a “grave concern.” A gauge of market expectations for additional stimulus rose to record 99 percent in August, according to Citigroup Inc.
Alcoa Inc. and Caterpillar Inc. climbed at least 1.7 percent, leading gains among the biggest companies in the U.S. Green Mountain Coffee Roasters Inc. jumped 2.5 percent after Luigi Lavazza SpA increased its stake in the company. Ralph Lauren Corp. paced declines among luxury goods companies following Burberry lower.
Moody’s Warns
S&P 500 futures maintained gains before the open of exchanges in New York after Moody’s Investors Service said it may cut the U.S. credit rating if Congress fails to agree on a plan to reduce the nation’s debt.
Confidence among small businesses in the U.S. climbed in August for the first time in four months as more companies anticipated a pickup in hiring and sales. The National Federation of Independent Business’s optimism index rose to 92.9 from a nine-month low of 91.2 in July. Government data showed the U.S. trade deficit widened in July for the first time in four months as the global economic slowdown reduced demand for American-made goods.
The dollar declined versus all 16 counterparts, and the Dollar Index touched its weakest level since May 10. The yield on 10-year Treasury notes rose three basis points to 1.69 percent. The government plans to sell $32 billion of three-year debt, the first of three auctions this week totaling $66 billion.
Luxury Goods
Burberry led losses in Britain’s FTSE-100 Index after saying full-year profit will be at the lower end of analyst estimates amid slowing sales growth. Hugo Boss AG, LVMH Moet Hennessy Louis Vuitton SA and Cie. Financiere Richemont SA retreated at least 4 percent.
The euro strengthened against 13 of its 16 major peers, climbing as much as 0.7 percent to $1.2841, the strongest level since May 15. Two-year Spanish and Italian bonds reversed earlier declines to trade little changed.
Gold rose 0.4 percent to $1,738.30 an ounce. United Nations Certified Emission Reduction credits dipped below 2 euros for the first time on the ICE Futures Europe exchange in London.
The MSCI Emerging Markets Index added 0.3 percent for a fourth straight gain, its longest rally in a month. The Shanghai Composite Index slipped 0.7 percent after auto sales missed analysts’ estimates and Macquarie Group Ltd. cut its economic growth estimate for the country. India’s Sensex rose 0.5 percent. Russia’s Micex Index slipped 0.1 percent.
--With assistance from Kana Nishizawa in Hong Kong and Claudia Carpenter, Lars Paulsson and Andrew Rummer in London. Editor: Michael P. Regan
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
