U.S. stocks rallied and gold plunged the most since 2008 after reports on durable-goods orders and home prices beat estimates. Treasuries dropped and the dollar gained.
The Standard & Poor’s 500 Index climbed 1.2 percent to 1,176.72 at 3:50 p.m. in New York, building on yesterday’s 3.4 percent surge. Gold futures slumped 5.2 percent to $1,763.90 an ounce in after-hours trading. Prices surpassed $1,900 for the first time ever this week. Treasuries dropped, driving yields on 10-year notes up 15 basis points to 2.30 percent. The U.S. currency gained versus 15 of its 16 major peers, and the Dollar Index rallied 0.1 percent after declining 0.3 percent.
Stocks swung between gains and losses, with the S&P 500 rebounding from a 0.5 percent decline, as trading was swayed more than usual by levels watched by so-called technical analysts as investors await an Aug. 26 speech by Federal Reserve Chairman Ben S. Bernanke in Jackson Hole, Wyoming. Gold retreated amid speculation financial markets are stabilizing.
“Any time you see life in the walking dead, it certainly makes you feel a lot better,” Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private- banking unit of KeyCorp in Cleveland, said in a telephone interview. “If investors can be reassured that a disaster is not imminent, that’s good for the market and the industries that got hammered lately.”
The reports on goods meant to last at least three years and housing prices contrasted with data this month on jobless claims, consumer confidence and manufacturing that spurred concern the U.S. is poised for a recession. The S&P 500 lost 15 percent between April 29 and yesterday, with the retreat accelerating in July after a debate in Congress on how to cut the budget deficit spurred S&P to strip the government of its AAA credit rating.
A rally earlier today lost momentum after the S&P 500 rose to about 1,173, its closing level after gains of 4.7 percent on Aug. 9 and 4.6 percent on Aug. 11. The index surged yesterday after falling to 1,121.09 the day before, within 2 points of its 11-month closing low of 1,119.46, reached Aug. 8.
“Resistance came in pretty much where you would expect to see it followed by a predictable pullback to last night’s close,” Michael Shaoul, chairman of Marketfield Asset Management in New York, said in an e-mail. His firm oversees $1 billion. “The most likely outcome is still a retracement of the majority of yesterday’s gains in the U.S., but if the S&P 500 could move back up above 1,170-1,175 again, maybe you’d get the shorts under some pressure.”
Gold dropped as yesterday’s rally in stocks eroded the appeal of the precious metal as a haven. The metal plunged 5.6 percent in regular trading to settle at $1,757.30, its lowest close since March 2008. It has tumbled after peaking at a record $1,917.90 an ounce yesterday.
“Gold is where people are hiding versus the stock market, so as the stock market stabilizes or improves, you will see gold sell off,” Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York, said in an e- mail. “The markets will continue to be volatile as we head into Friday and Bernanke’s speech.”
Treasuries fell, with yields on the 10-year note reaching 2.29 percent, the highest in a week, as the U.S. sold $35 billion in five-year notes at a record low auction yield. The sale is the second of three note auctions this week totaling $99 billion.
The euro lost 0.2 percent to $1.4418. The U.S. currency climbed 0.4 percent against the Swiss franc. Currencies of higher-yielding countries including New Zealand and South Africa fell as U.S. stocks fluctuated, damping risk appetite.
The yen fell 0.5 percent against the dollar and 0.3 percent against the euro and as Japan took steps to help companies cope with the currency’s strength. Officials will release $100 billion to fund loans by Japan Bank for International Cooperation, Finance Minister Yoshihiko Noda told reporters in Tokyo. JBIC, as the lender is known, is a state-run export credit agency.
Moody’s Investors Service cut Japan’s credit rating by one step, saying “weak” prospects for growth will make it difficult to tackle public debt. The company put the nation’s debt on review for a downgrade in May, calling on the government to step up its efforts to narrow the budget gap.
Crude oil dipped 0.3 percent to $85.16 a barrel as the plunge in gold and rise of the dollar curbed investor interest in raw materials. Futures were up as much as 1.4 percent after an Energy Department report showed that U.S. inventories unexpectedly declined as refinery operations matched a one-year high.
The Stoxx Europe 600 Index added 1.4 percent after dropping as much as 0.6 percent earlier, even as data showed German business confidence fell to its lowest in more than a year. The index is up 3 percent for the week. WPP Plc, the world’s biggest advertising agency, climbed 7.4 percent today after reporting earnings that beat estimates. Heineken NV tumbled 7.6 percent as the third-largest brewer by volume said profit is unlikely to grow this year.
Rates on Greek two-year notes soared to the highest level since the euro was introduced. Yields climbed 4.4 percentage points to 44.03 percent on concern the nation’s second bailout will be delayed as its euro-region partners squabble over a collateral deal. Greek yields have surged since Finland said on Aug. 16 it secured a collateral deal to ensure its contribution would be repaid, garnering criticism from other euro-area nations.
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