U.S. stocks rose, erasing an early slump, as speculation that global credit conditions are improving overshadowed a drop in commodity producers. Treasuries climbed, while the yen and dollar gained against the euro.
Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of New York Mellon Corp. helped financial shares in the Standard & Poor’s 500 Index erase a 1.3 percent slide after Moody’s Investors Service said it may lift Brazil’s debt rating. American Express Co. jumped 5.3 percent as Stifel Nicolaus & Co. upgraded the shares, while Philip Morris International Inc. helped lead a gauge of consumer companies to the best advance among 10 groups.
“Recently, anytime the rating agencies make an announcement, it’s to downgrade someone,” said Mark Bronzo, a money manager at Security Global Investors, which oversees $20 billion in Irvington, New York. Given “that they were talking positively about an important emerging nation, people took that as a mild positive,” he said.
The Standard & Poor’s 500 Index rose 0.3 percent to 898.72. The benchmarkindex slid as much as 1.1 percent earlier, led by producers of energy and raw materials, as crude-oil and metal prices slumped. The Dow added 44.13 points, or 0.5 percent, to 8,324.87 after tumbling 75 points earlier.
Treasuries Rise
Treasury two-year notes rose for a third session as the Federal Reserve bought $7 billion in government securities and an auction of inflation-linked bonds drew the most demand in nine years.
Short-term debt rose gained while 10-year notes were little changed before this week’s auction of the securities, and the yield gap between them was at the steepest level in more than two weeks. U.S. service industries from retailers to homebuilders shrank in June for the ninth straight month. An auction of $8 billion of 10-year inflation-linked debt drew the most demand since 2000.
“We are starting to see risk assets, which have really outperformed in the last three months, start to wobble,” William O’Donnell, the Stamford, Connecticut-based head of Treasury strategy at RBS Securities Inc., said in a Bloomberg Television interview. The firm is one of 16 primary dealers that trade with the Fed. “That has brought some money back to the Treasury market which is what we saw in the auctions two weeks ago and the TIPS auction today.”
The two-year note yield fell four basis points, or 0.04 percentage point, to 0.95 percent, according to BGCantor Market Data. The rate touched 0.9252 percent, the lowest level since June 4. The price of the 1.125 percent security due in June 2011 increased 2/32, or 63 cents per $1,000 face amount, to 100 11/32. The 10-year note yield was little changed at 3.50 percent.
Oil Falls
Crude oil fell to a five-week low on growing concern that the global economic recovery will falter, curbing fuel consumption.
Oil dropped for a fourth straight session, the longest slide since February, as falling payrolls weigh on consumer spending for fuels. The price has dropped 13 percent from an eight-month high of $73.38 a barrel on June 30.
“It’s hard to see evidence of an economic recovery in the near term, so energy prices are moving lower from their lofty levels,” said John Kilduff, a senior vice president of energy at MF Global in New York.
Crude-oil futures for August delivery fell $2.68, or 4 percent, to $64.05 a barrel on the New York Mercantile Exchange, the lowest settlement since May 27. Prices are up 44 percent this year.
Currency Market
The yen advanced for a third session versus the euro in the longest stretch of gains since May on speculation the global economic recovery will be slow, encouraging demand for a refuge.
The dollar and yen touched the strongest levels in almost two weeks versus the euro as equities fell in Asia and Europe. The Norwegian krone, South African rand and Brazilian real declined versus the dollar and yen after oil and other commodities slumped.
“It’s a classic risk-aversion trade, with the yen on top, followed by the dollar,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “Evidence is building that economic recovery won’t be as strong as people hoped for. The financial markets’ optimism will have to come down to the reality.”
The yen climbed 0.8 percent to 133.26 per euro in New York, from 134.26 on July 3. The dollar traded at $1.3978, compared with $1.3980. The dollar touched $1.3877 and the yen reached 131.74 per euro, the strongest levels since June 23. Japan’s currency appreciated 0.7 percent to 95.33 versus the dollar from 96.04.
