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US stocks advance; S&P 500 scales new intraday high

LiveMint logoLiveMint 13-05-2014 Chuck Mikolajczak

New York: The US stocks advanced modestly on Tuesday, with the benchmark S&P 500 scaling a new intraday high, while a key index of European shares hit a six-year high on robust results and the possibility of further stimulus from the European Central Bank (ECB).

After setting a new closing high on Monday, the S&P 500 climbed to a fresh intraday high of 1,902.17 despite a soft US retail sales report, which reined in hopes of a surge in growth in the second quarter.

“You really had a spectacular March. You are now having an April hangover after the March bounce back,” said Guy Berger, an economist at RBS Securities in Stamford, Connecticut, referring to the retail sales data.

“The reality of the economy is decent but not great. Some people over-extrapolated the March numbers.”

Despite the subdued gains on Wall Street, advances were broad, with only one of the 10 major S&P sectors in negative territory.

The Dow Jones industrial average rose 29.55 points, or 0.18%, to 16,725.02, the S&P 500 gained 4 points, or 0.21%, to 1,900.65 and the Nasdaq Composite added 4.03 points, or 0.1%, to 4,147.892.

The US treasuries yields fell in the wake of the US retail sales figures; ten-year notes were last up 9/32 in price to yield 2.62%, down from 2.66% late on Monday.

Europe And The Euro

Sentiment in Europe was boosted by two Bundesbank sources’ comments that the German central bank was prepared to support ECB policy action, if needed, to shore up the region’s economy, extending euro losses against the dollar.

The pan-European FTSEurofirst 300 index, of the region’s biggest companies by market cap, inched up 0.1% to 1,365.90 points, its highest level since May 2008, while Britain’s FTSE hit a 14-year high.

The report followed a survey showing a sharp decline in investor morale in Europe’s biggest economy, increasing expectations the ECB will ease monetary policy further next month.

The run of positive corporate news continued in Europe, with Germany’s ThyssenKrupp raising its full-year earnings outlook on Tuesday, while aerospace group Airbus Group reported better-than-expected profits and reaffirmed its financial goals for the year.

The euro fell to a trough of $1.3698, its lowest since 7 April, on the ECB speculation, but trimmed declines in the wake of the retail sales report and was down 0.3% on the day. The euro had weakened earlier in the day to a one-month low after the German ZEW survey fell short of expectations.

“We see the euro trading with a downward bias given the market is expecting some kind of easing from the ECB next month. It is still not clear whether it will do quantitative easing, but a rate cut is more likely,” said Yujiro Goto, currency strategist at Nomura. Reuters

Blaise Robinson, Anirban Nag and Richard Leong also contributed to this story.

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