Bloomberg

Stocks in U.S., Europe Gain as Dollar Rallies

U.S. stocks rose, extending the Standard & Poor’s 500 Index’s third weekly gain in December, as European equities rallied after American jobless claims and consumer confidence were better than expected. The dollar trimmed losses against the euro and 10-year Treasuries advanced.
The S&P 500 added 0.5 percent to 1,249.44 at 11:12 a.m. New York time as the Dow Jones Industrial Average rallied 28.73 points, or 0.2 percent, to 12,136.47. The Stoxx Europe 600 Index advanced 0.9 percent. The euro strengthened 0.1 percent to $1.3053 after rising 0.6 percent. Yields on 10-year Treasuries dropped three basis points to 1.94 percent. Oil futures rose 0.9 percent, a fourth straight gain.
Equities gained after the number of Americans applying for unemployment benefits decreased to 364,000, the fewest since April 2008, while the Thomson Reuters/University of Michigan index of consumer sentiment topped the median economist forecast and climbed to a six-month high. The dollar and Treasuries gained after U.S. gross domestic product expanded at a 1.8 percent rate in the third quarter, slower than the 2 percent median growth projection in a Bloomberg survey.
“We’re definitely muddling through in the U.S.,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “It may not be a bullish case, but the jobs situation is less grim than it was. You still have to be wary that a significant recession in Europe could pull the rest of the world into a global recession, including the U.S.”

Economic Surprises

The S&P 500 rallied 2 percent this week through yesterday after reports showed U.S. housing starts topped economists’ projections and German business confidence unexpectedly grew. The Citigroup Economic Surprise Index for the U.S. has held above 70 every day since Dec. 2, showing reports are beating projections by the most in nine months.
Morgan Stanley and General Electric Co. increased more than 2.7 percent, pacing gains among the biggest U.S. companies. Akamai Technologies Inc. surged 18 percent after agreeing to buy Cotendo to expand Internet-based and mobile services. Yahoo! Inc. advanced 1.1 percent, giving the stock a three-day gain of 11 percent, as it is said to consider selling most of its stake in Alibaba Group Holding Ltd.
Treasury 30-year bonds rose for the first time in three days after yields had the biggest back-to-back daily gains since October. Bonds remained higher after data showed the U.S. economy grew less in the third quarter than previously estimated. The Federal Reserve prepared to make its final 2011 purchase in a program to lower borrowing costs.
Yields on the 30-year bonds fell three basis points, or 0.03 percentage point, to 2.97 percent.
The yen fell against most of its major peers as stock markets climbed amid reduced demand for haven assets and signs U.S. employment is strengthening. It weakened 0.1 percent to 78.13 dollars and was little changed at 101.89 against the euro.
To contact the reporters on this story: Nick Baker in New York at nbaker7@bloomberg.net; Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net