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Stocks Rise, Treasuries Fall as Israel, Hamas Reach Truce

By Michael P. Regan and Rita Nazareth
November 21, 2012 4:26 PM EST 10 Comments
The euro fell and Asian stocks erased gains after European finance ministers failed to agree on a debt-reduction package for Greece.
Photographer: Kostas Tsironis/Bloomberg
The euro fell and Asian stocks erased gains after European finance ministers failed to agree on a debt-reduction package for Greece.

The Standard & Poor’s 500 Index (SPX) extended its longest rally in seven weeks, while Treasuries fell for a third day and oil trimmed earlier gains as Israel and Hamas agreed to a cease-fire after a weeklong conflict.

The S&P 500 increased 0.2 percent to 1,391.03 at 4 p.m. in New York for a fourth straight gain. Ten-year Treasury note yields climbed one basis point to 1.68 percent, the highest since Nov. 8. Oil added 0.7 percent while cattle reached a record. The euro reversed losses triggered earlier when finance ministers failed to agree on a Greek debt plan. The rand traded above 9 per dollar for the first time in three years.

Israel and the Palestinian militant group Hamas agreed to bring to an end more than a week of air strikes and missile attacks, after talks brokered by Egypt’s Islamist leaders and the U.S. Economic reports earlier today showed fewer people filed applications for unemployment benefits in the U.S., while more Americans said the economy will improve than at any time in the past decade.

“The announcement of the cease-fire is by no means a fix to the issue, but it does suggest that the negotiations are going on,” Alan Gayle, senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion, said in a phone interview. “In the U.S., the economic releases were mixed, but generally positive.”

U.S. markets will be closed tomorrow for the Thanksgiving holiday. About 4.8 billion shares changed hands today in the U.S., 22 percent below the three-month daily average.

The S&P 500 has gained an average 0.6 percent during the week of Thanksgiving, according to data since World War II compiled by Bloomberg. That compares with 0.15 percent in all calendar weeks in the same time frame.

Market Movers

Among U.S. stocks moving today, Salesforce.com Inc. (CRM) jumped 8.8 percent after its forecasts for fiscal fourth-quarter sales and profit that were in line with analysts’ estimates. Deere & Co. (DE), the world’s largest agricultural equipment maker, fell 3.7 percent as earnings missed analysts’ estimates.

Technology, energy, telephone and consumer-discretionary stocks led and advance in nine of the 10 main industries in the S&P 500, while Hewlett-Packard Co. (HPQ), Bank of America Corp. and Microsoft Corp. climbed at least 0.9 percent for the biggest gains in the Dow Jones Industrial Average.

U.S. jobless claims fell by 41,000 to 410,000 last week, Labor Department data showed. The Conference Board’s October gauge of leading economic indicators increased 0.2 percent after a revised 0.5 percent gain in September that was lower than initially reported. The Thomson Reuters/University of Michigan final index of consumer sentiment for November was little changed at 82.7, a five-year high, from the prior month’s 82.6. The gauge was projected to rise to 84.5, according to the median forecast economists.

‘Substantial Threat’

Federal Reserve Chairman Ben S. Bernanke said yesterday an agreement on ways to reduce long-term federal budget deficits would remove an impediment to growth, while failure to avoid the so-called fiscal cliff would pose a “substantial threat” to the recovery. The S&P 500 has fallen as much as 5.3 percent since the Nov. 6 election set up a budget showdown between President Barack Obama and the Republican-controlled House.

Natural gas, silver, gasoline and heating oil rose more than 1 percent to lead gains in 14 of 24 commodities tracked by the S&P GSCI.

Cattle futures surged to a record on signs of rising demand for beef as supplies tighten after the worst drought since 1956 prompted U.S. ranchers to cull herds. Cattle futures for February delivery rose as much as 1 percent $1.318 a pound on the Chicago Mercantile Exchange.

Two-year and 30-year debt U.S. securities also retreated, sending yields on each up at least one basis point. U.S. government securities due in 10 years and longer returned 2.2 percent in the past month, including currency moves, the most of 144 sovereign indexes tracked by Bloomberg and the European Federation of Financial Analysts Societies.

European Markets

The Stoxx Europe 600 Index erased an earlier drop of as much as 0.3 percent and gained 0.2 percent. Daimler AG and Renault SA paced gains in auto companies. Johnson Matthey Plc slid 5.8 percent as the maker of a third of all autocatalysts reported a 2.2 percent drop in first-half profit.

The yen weakened against 15 of 16 major peers. Japan’s exports fell 6.5 percent in October from a year earlier, leaving a trade deficit of 549 billion yen ($6.7 billion), the Finance Ministry said today. Economists estimated a 4.9 percent decline in exports. Imports dropped 1.6 percent.

Yen Weakens

The Japanese currency weakened 2.5 percent in the past week, the worst performer tracked by Bloomberg Correlation- Weighted Currency indexes, amid speculation national elections next month will hand power to an opposition party in favor of more stimulus.

The rand weakened against all 16 major counterparts after South Africa inflation unexpectedly quickened. The currency retreated as much as 1.9 percent to 9.0092 per dollar, the weakest since April 2009. Yields on 13.5 percent bonds due September 2015 climbed five basis points, or 0.05 percentage point, to 5.46 percent.

The MSCI Emerging Markets Index added 0.2 percent, gaining for a third day, as stocks in China, Argentina and Mexico led gains. The Shanghai index jumped 1.1 percent, the most since Nov. 1, on speculation the central bank will lower reserve-ratio requirements to boost investor confidence.

To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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