(Bloomberg) — U.S. stocks climbed with European equities as earnings from Merck & Co. and Deutsche Bank AG beat estimates. Treasuries reversed losses as the Federal Reserve starts a policy meeting to determine the future of stimulus.
The Standard & Poor’s 500 Index advanced 0.3 percent at 11:15 a.m. in New York, erasing this month’s decline. The Nasdaq Composite Index pared earlier gains as it headed for its worst month since 2012. The Stoxx Europe 600 Index climbed 1 percent. Treasury 10-year yields were little changed at 2.70 after earlier rising three basis points. The yen weakened against all but three of its 16 major peers. Russia’s Micex Index rose 0.9 percent, while crude prices climbed amid new sanctions by the U.S. and Europe.
Merck’s profit beat estimates as it cut spending on promotions and research. EBay Inc. and Twitter Inc. are among U.S. companies reporting results today. Deutsche Bank posted trading revenue that exceeded projections. The Fed is forecast to scale back monthly bond buying after its two-day meeting, amid signs the economy withstood the effects of harsh winter weather. The U.S. and the European Union stepped up sanctions against Russia yesterday.
“Earnings have been beating expectations and guidance will remain strong for coming quarters because of this spring thaw and economic rebound,” Patrick Spencer, who helps oversee more than $100 billion as London-based head of equity sales at Robert W. Baird & Co., said in a telephone interview. “That will continue to underpin the market.”
Merck, the second-biggest U.S. drugmaker by sales, gained 2.8 percent for the steepest climb in the Dow Jones Industrial Average. Of the 274 companies in the S&P 500 that have posted results, 74 percent of earnings beat analysts’ estimates and 52 percent topped sales projections, data compiled by Bloomberg show.
The S&P 500 gained 0.3 percent yesterday, closing 1.1 percent below its record. The gauge was little changed for the month as of yesterday’s close, after reaching an all-time high on April 2.
The Nasdaq Composite has fallen 2.7 percent this month, as Internet stocks have sold off amid concern valuations have outpaced estimates for earnings growth. Nasdaq companies trade at 35 times reported earnings, about double the level of S&P 500 members. The Fed will probably cut bond buying to $45 billion at the meeting that starts today, according to the median of 43 economists’ estimates compiled by Bloomberg. Policy makers will keep their target interest rate for overnight bank lending in a range of zero to 0.25 percent, Bloomberg survey shows.
Data today showed the Conference Board’s index of U.S. consumer confidence decreased to 82.3 in April from 83.9 a month earlier. Reports later this week on gross domestic product and hiring in April will give investors more clues to how the economy withstood a severe winter.
FedEx Corp., General Motors Co. and McDonald’s Corp. have all blamed weather for poor earnings performance as snow storms during the first three months of the year slowed shipments and kept shoppers indoors.
“The economy is in a sweet spot,” Spencer said. “Growth isn’t so exuberant that the Fed needs to withdraw their support quickly, and not so anemic that they need to be concerned about further weakening.”
Apple Inc. is about to join the ranks of the biggest U.S. corporate borrowers as the company starts marketing bonds in what it says may rival last April’s then-record $17 billion offering. The iPhone maker is offering bonds in seven parts, according to a person with knowledge of the transaction. Apple shares slipped 0.1 percent, after three days of gains.
Five shares advanced for every one that declined in the Stoxx 600, with trading volumes 13 percent lower than the 30-day average, according to data compiled by Bloomberg. All but one of the 19 industry groups rose, led by oil and technology stocks.
Deutsche Bank climbed 2.5 percent after profit fell less than estimated. Europe’s largest investment bank by revenue also said it plans to sell at least 1.5 billion euros ($2.1 billion) of bonds designed to incur losses in a crisis, helping the firm meet stricter limits on leverage.
Statoil ASA, Norway’s biggest energy company, gained 4.5 percent to a five-year high after profit exceeded projections.
ABB Ltd. lost 7.1 percent after the world’s largest maker of power transformers posted quarterly profit that missed estimates. Serco Group Plc slumped 20 percent after the operator of London’s Docklands Light Railway said it may lower its forecast and sell shares. Calm investors
A risk measure that uses options to forecast fluctuations in equities, currencies, commodities and bonds fell to its lowest level in almost seven years last week. Calm is blanketing investors after the MSCI All-Country World Index more than doubled from March 2009, 10-year Treasury yields climbed from an all-time low of 1.39 percent reached in 2012, and the euro traded in the narrowest range ever last week.
The MSCI Emerging Markets Index climbed 0.7 percent, rebounding from a one-month low as investors dismissed a new round of Russia sanctions and phone shares surged in China.
Russian stocks and bonds climbed for a second day and the ruble strengthened after a the sanctions bypassed the country’s major companies and banks.
The U.S. yesterday named seven individuals, including Igor Sechin, head of oil giant OAO Rosneft, and 17 companies linked to allies of President Vladimir Putin, such as InvestCapitalBank. The EU put Russian Deputy Premier Dmitry Kozak on its expanded sanctions list.
The Bloomberg Dollar Spot Index was little changed for a fourth session. The yen weakened 0.2 percent to 102.58 per dollar, dropping most against its higher-yielding peers, as the nature of the sanctions boosted investors’ risk-taking appetites.
The euro slid 0.2 percent to $1.3819, snapping a five-day gain after a report showed German inflation accelerated less than economists forecast in April, increasing pressure on the region’s central bank to take steps to add stimulus in the euro area.
Italian borrowing costs rose at an auction of six-month bills today as the government sold 7 billion euros of 184-day bills at 0.594 percent, up from 0.504 percent at the previous auction March 27. Italy redeems over 8 billion euros of bills April 30.
Moody’s Investors Service raised its outlook on the Greek banking system to stable from negative. Greek 10-year bond yields fell 12 basis points to 6.28 percent.
The S&P GSCI gauge of 24 commodities advanced 0.7 percent, its first gain in three days. West Texas Intermediate oil rose as much as 1.3 percent on speculation about U.S. supplies.
Corn rose for a third day, headed for the longest run of monthly gains since 2010, after the U.S. government reported planting in the world’s largest grower and exporter trailed a five-year average.
–With assistance from Emma O’Brien in Wellington, Inyoung Hwang, Cecile Vannucci, Claudia Carpenter, Paul Dobson and Shelley Smith in London and Jonathan Burgos and Pratish Narayanan in Singapore.