Jan. 30 (Bloomberg) -- U.S. stocks rose from a two-month low while Treasuries and gold fell as data showed rising consumer spending and corporate earnings beat estimates. The iShares MSCI Emerging Markets Index ETF advanced and the dollar climbed a fifth day versus the euro.
The S&P 500 rallied 1.3% to 1,796.33 at 12:14 p.m. in New York, erasing yesterday’s decline. The iShares emerging markets ETF jumped 1.4% and European stocks climbed. The 10-year Treasury yield rose four basis points to 2.72% as the U.S. auctions $64 billion in debt. The dollar strengthened 0.7% against the euro, while Hungary’s forint retreated. Gold and natural gas slumped more than 1.4%, aluminum dropped to a four-year low and oil advanced.
The U.S. economy expanded at a 3.2% pace in the fourth quarter as Americans’ spending climbed the most in three years, Commerce Department figures showed today in Washington. American equities are poised for their worst monthly declines since May 2012 amid turmoil in emerging markets. Investors are pulling money from exchange-traded funds that track emerging markets at the fastest rate on record, as China’s slowing growth and cuts to central-bank stimulus sink currencies from Turkey to Brazil.
“The fact we can print a quarter in which GDP growth was more than 3% even though government spending contracted as much as it did, is unquestionably a positive,” Dan Greenhaus, chief global strategist at BTIG LLC in New York, said by phone. “The concerns over emerging markets are the dominant topic. To the extent this remains contained, the sell off is likely to be limited.”
More than $7 billion flowed from ETFs investing in developing-nation assets in January, the most since the securities were created, data compiled by Bloomberg show.
Emerging economies have benefited from cheap money as three rounds of Fed bond buying pushed capital into their borders in search of higher returns. The central bank began paring the purchases by $10 billion to $75 billion this month and announced yesterday plans to reduce the amount by another $10 billion.
Facebook Inc. jumped 16% after the world’s largest social network reported that more than half of its advertising revenue came from mobile devices in the last quarter of 2013. Blackstone Group LP and Under Armour Inc. also rallied after reporting better-than-estimated earnings.
Companies in the S&P 500 probably increased their earnings per share by 6.6% in the fourth quarter of 2013 and their revenue by 2.6%, analysts’ estimates compiled by Bloomberg show.
The annualized gain in U.S. gross domestic product matched the median forecast in a survey of economists and followed a 4.1% advance in the prior three months, Commerce Department figures showed today. Growth in the second half of the year was the strongest since the six months ended in March 2012. Consumer spending, which accounts for almost 70% of the economy, climbed 3.3%, less than estimated.
Separate data showed contracts to purchase previously owned homes in the U.S. plunged in December by the most since May 2010 as higher borrowing costs and bad weather held back sales.
Asian stocks and industrial metals tumbled after a report showed China’s manufacturing industry contracted. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 0.8%, taking this year’s decline to 9.2%. Aluminum dropped as much as 1.1% to $1,723 a metric ton, the lowest since July 2009, and zinc fell for a seventh day.
A Chinese Purchasing Managers’ Index fell to 49.5 from 50.5 in December, HSBC Holdings Plc and Markit Economics said in a statement. The reading compared with the median 49.6 estimate in a Bloomberg News survey of 14 economists. A number below 50 indicates contraction.
European stocks advanced, with the Stoxx Europe 600 Index climbing 0.3% to pare its monthly decline to 1.5%. Givaudan SA, the world’s largest maker of flavors and fragrances, jumped 6.3% after posting full-year net income that beat analyst estimates. Diageo Plc, the biggest distiller, lost 4.7% after reporting sales growth that missed forecasts.
Hungary’s forint dropped as emerging-market currencies extended a week-long rout. The forint depreciated 0.6% to 227.69 per dollar after dropping as much as 1.6%. The Hungarian currency has declined “too fast, too big” and the central bank is monitoring its move and the market environment, Gyula Pleschinger, a member of the central bank’s Monetary Council, said yesterday.
The dollar’s strength against the euro was driven partly by speculation that emerging-market central banks may take steps to prevent their exchange rates from falling further, according to Geoffrey Yu, senior currency strategist at UBS AG in London.
“If these central banks are getting ready for intervention, they would need to over-fund in dollars,” said Yu. “That may involve selling euro reserves into the U.S. currency.”
The yen has advanced 4.3% this year, the biggest gain in Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies.
Gold futures tumbled 1.6%, the most since Jan. 6, as U.S. economic growth boosted speculation that the Fed will continue to scale back monetary stimulus.
Treasuries declined, with 10-year yields climbing from a two-month low, before the U.S. auctions $64 billion of debt, the first time it will conduct two fixed-coupon debt sales in a single day since October 2008.
West Texas Intermediate crude rose 1% to $98.26 a barrel, the highest level in four weeks. Natural gas dropped 5% as a government report showed a U.S. stockpile decline that matched analyst estimates. Prices are up 23% this month, heading for the biggest gain since September 2009.