(Bloomberg) -- The Standard & Poor’s 500 Index extended its all-time high and Treasuries fell as a report showed U.S. companies added to payrolls last month. The dollar strengthened with copper and gold.
The S&P 500 gained 0.3% to 1,890.90 at 4 p.m. in New York, after reaching a record yesterday. The Dow Jones Industrial Average rose 0.2%, briefly erasing its loss for the year. The yield on 10-year Treasuries increased five basis points to 2.80%. The Stoxx Europe 600 Index added 0.2%. The dollar climbed to a two-month high against the yen. Copper advanced 0.2% following an earthquake in Chile and gold jumped for the first time in six days. Crude futures pared earlier losses.
Companies in the U.S. added 191,000 jobs in March, less than the 195,000 median estimate in a Bloomberg survey, figures from the ADP Research Institute showed before the government’s employment report on Friday. The value of equities worldwide climbed to an all-time high of $63.09 trillion yesterday as reports showed a pickup in American manufacturing and vehicle sales. Mining companies reported no damage after the 8.2- magnitude earthquake in Chile that killed six people.
“The positive tone from yesterday is most likely to continue into the jobs report, absent some big macro piece of data that comes out between now and then,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “Longer-term investors are still of the opinion that the U.S. equity market remains one of the best places to be invested for this year.”
The S&P 500 rose 0.7% yesterday as consumer and technology stocks pushed the gauge to a record and an index of manufacturing boosted optimism the economy withstood the severe winter weather.
FREEZING TEMPERATURES
Federal Reserve stimulus has helped propel the S&P 500 higher by as much as 180% from its bear-market low in March 2009. The equity gauge climbed 1.3% in the first three months of 2014, its fifth consecutive quarterly advance.
The equities benchmark trades at 17.5 times reported earnings, the highest level since 2010 and 11% above its five-year average, according to data compiled by Bloomberg.
Treasuries fell amid speculation the U.S. economy is improving enough for the Fed to raise interest rates next year.
Fed Chair Janet Yellen said last month the central bank may end the bond-buying program it uses to support the economy this fall and increase borrowing costs six months after that. She said this week that “considerable slack” in labor markets showed that the central bank’s accommodative policies will be needed for “some time.”
The central bank has kept its target for federal funds, the rate banks charge each other on overnight loans, in a range of zero to 0.25% since 2008.
FED COMMENTS
Fed Bank of St. Louis President James Bullard said in a Bloomberg Radio interview today that a further slowing of inflation could prompt policy makers to suspend tapering of bond purchases, though he doesn’t expect that to happen.
Central bank policy should remain accommodative “for quite some time” given “considerable amount” of economic slack that remains, Atlanta Fed President Dennis Lockhart said in a speech in Miami.
Reports from hiring to factory output had shown weakness this year as freezing temperatures and mountains of snow kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders.
A release from the Commerce Department today showed factory orders rose 1.6% in February, topping economists’ estimates for a 1.2% advance.
ETF TESTING
Investors have removed $3.7 billion from U.S. equity exchange-traded funds in the past five days and added $1.3 billion to bond ETFs, data compiled by Bloomberg show. Financial stocks saw the most money removed among industry ETFs, losing $489.2 million during the past week.
The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as the VIX, dropped 0.1% to 13.09, falling for a fifth straight day.
The Stoxx 600 climbed for a seventh straight day, the longest streak since October. Deutsche Post AG added 4.6% after Europe’s largest mail service predicted operating profit will rise. Deutsche Boerse AG lost 2.2% after saying U.S. regulators are probing its Clearstream Banking unit.
German 10-year bonds led most euro-area sovereign debt lower as investors bet the European Central Bank will refrain from adding new stimulus to tackle slowing inflation. The yield climbed 4 basis points to 1.62% after ECB Vice President Vitor Constancio said yesterday the euro area will probably avoid outright deflation. Germany sold 2.4 billion euros ($3.3 billion) of five-year notes today.
EMERGING MARKETS
The MSCI Emerging Markets Index increased 0.3%, gaining for a ninth straight day. The Shanghai Composite Index climbed 0.6% to the highest level in a week as developers rallied on speculation the government will relax housing curbs. Brazil’s Ibovespa rallied 2.8%, erasing this year’s drop.
Copper advanced for a second day, climbing to a three-week high. Chile is the biggest producer of the metal. Santiago-based Codelco, the largest miner of copper, KGHM Polska Miedz SA and Pan Pacific Copper Co. said their projects and mines escaped damage from the earthquake.
Aluminum climbed 1.9% to the highest since Dec. 30 after trading above the 200-day moving average for the first time since October. Brazilian aluminum companies, producing at the lowest level in 12 years amid high power costs and metal- price declines, expect authorities to ration supply as a drought curbs hydroelectric generation in the country.
CRUDE OIL
Brent crude dropped below $105 a barrel for the first time since November after rebels in eastern Libya said they were close to a deal to reopen ports.
West Texas Intermediate crude fell 0.1% to $99.62 a barrel, paring an earlier drop of 0.9%. A government report showed that U.S. crude inventories decreased 2.38 million barrels to 380.1 million last week. Stockpiles were projected to climb 2.5 million barrels, according to the median of analyst responses in a Bloomberg survey.
U.S. natural gas jumped 2.1%, erasing an earlier loss and snapping a three-day decline, on speculation that an unusually cold start to spring will reduce supplies already at an 11-year low.
Gold rose 0.8% to $1,290.90 an ounce, ending the longest slump since November, on speculation that demand for bars and jewelry will increase in China after futures touched a seven-week low. Gold slipped 2.9% in March, partly on the outlook for reduced stimulus in the U.S.
The dollar rose against most of its 16 major peers. The U.S. currency strengthened 0.2% to 103.86 yen after touching 103.94, the highest since Jan. 23. It jumped 1% to 85.54 cents per New Zealand dollar. The euro fell 0.2% to $1.3765.
