U.S. stocks rose, with benchmark indexes climbing to records, as employment data boosted optimism in the economy. Gold fell after the Federal Reserve yesterday raised rate estimates for 2015.
The Standard & Poor’s 500 Index added 0.5 percent to an all-time high of 2,011.39 at 4 p.m. in New York, surpassing its record from Sept. 5. The Dow Jones Industrial Average added 0.6 percent to a record 17,265.99. The pound rallied on speculation Scotland will reject a referendum on independence, while the yen fell to a six-year low versus the dollar. The Bloomberg Commodity Index sank to a five-year low as copper and crude tumbled. Gold slid to the lowest in eight months.
Fed officials signaled Wednesday they won’t be raising interest rates anytime soon while suggesting they would tighten policy at a faster pace once the liftoff has begun. Unemployment claims in the U.S. plunged last week to a two-month low, while housing starts slumped from the highest in almost seven years. Alibaba Group Holding Ltd., the Chinese e-commerce giant, intends to pick a price for its nearly $22 billion initial public offering.
“Markets overnight enjoyed a nice bounce thanks to the Fed maintaining its ‘considerable time’ period language,” Paul Christopher, chief international investment strategist at Wells Fargo Advisors LLC in St Louis, said in an interview. “The Fed’s not in a hurry to move and when it does it will be a result of the time coming to normalize, not just to jack up rates.”
Equities advanced Wednesday, sending the S&P 500 up as much as 0.6 percent, after the central bank renewed its pledge to keep interest rates near zero for a “considerable time” after its bond-buying program ends, probably next month. Policy makers also projected a steeper increase in borrowing costs next year, raising the median estimate for the federal funds rate at the end of 2015.
The prospects for higher interest rates sent Treasurys lower. The yield on the two-year note was little changed after earlier today touching 0.59 percent, the highest since May 2011. The U.S. 10-year yield rose less than one basis point to 2.63 percent, a two-month high, following a three basis point gain yesterday.
Gold sank 0.7 percent to settle at $1,226.90 in New York. It reached $1,216.30 today, the lowest since Jan. 6. Higher rates reduce gold’s allure because the metal only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value.
The Bloomberg Dollar Spot Index was little changed near a 14-month high. The greenback dropped 0.4 percent to $1.29132 per euro after appreciating to $1.2835, the strongest level since July 2013.
The Fed tapered monthly bond buying by $10 billion for a seventh time, staying on course to end the program as soon as next month. Officials said the economy is expanding at a moderate pace and inflation is below its goal.
Jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. Another report today showed beginning home construction slumped 14.4 percent in August, the most since April 2013, indicating the recovery in housing remains uneven.
“Jobless claims came in a little better than expected but nothing crazy to shift anything one way or another as the market’s still in Fed mode,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said. “A majority of people are thinking July 2015 may be the rate increase and the market’s responding positively to the idea that rates aren’t coming any sooner.”
The pound surged 0.6 percent to $1.6377 and appreciated to its strongest level versus the euro since August 2012. Most polls yesterday showed the anti-independence Better Together group backed by Prime Minister David Cameron and the main U.K. parties leading the “yes” campaign.
The FTSE 100 Index of shares gained 0.6 percent after three days of declines. Yields on 10-year gilts rose six basis points to 2.58 percent. The Stoxx Europe 600 Index gained 1 percent for a second day of advances.
The MSCI Emerging Markets Index slid 0.6 percent on bets an increase in the Fed’s interest-rate target will spur outflows and as new home prices in China dropped.
Turkey’s benchmark gauge dropped 1.9 percent and Korea’s Kospi lost 0.7 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong retreated 0.9 percent, after rallying the most in two weeks yesterday. The Shanghai Composite Index added 0.4 percent.
The Bloomberg Commodity Index declined 1.3 percent to a five-year low. Copper for December delivery retreated 1.6 percent to settle at $3.094 a pound in New York. The loss was the biggest since Sept. 9. China is the biggest buyer of industrial metals.
West Texas Intermediate and Brent crudes dropped as a stronger dollar curbed the appeal of commodities to investors looking for a store of value. WTI for October delivery slid $1.35 to settle at $93.07 a barrel in the New York. Brent for November settlement fell $1.27 to end the session at $97.70 a barrel in London.
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