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S&P 500 approaches record as Treasuries rise; Dollar pares slide

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(Bloomberg) — U.S. stocks rose for the first time this week as the dollar weakened and a bond-market selloff showed signs of easing. Gold and silver futures rose to the highest since February.

The Standard & Poor’s 500 Index increased 0.7 percent at 11:41 a.m. in New York, climbing within 0.2 percent of a record after a three-day slide. The Bloomberg Dollar Spot Index retreated 0.1 percent, paring earlier losses. The yield on 10-year Treasuries fell six basis points to 2.23 percent while German bund rates slipped four basis points.

The dollar is heading for a fifth weekly decline, the longest streak since October 2013, as economic data undermine prospects for higher borrowing costs any time soon. Declines in the currency have generally boosted shares of the biggest U.S. companies on speculation they make American products more attractive overseas. Concern the dollar’s rally through March would crimp exports contributed to the biggest reduction in S&P 500 earnings estimates since 2009.

“The dollar’s getting a little bit weaker and the bond market is actually rallying a bit as opposed to what’s been happening,” Mark Kepner, an equity trader at Themis Trading LLC, in Chatham, New Jersey, said via phone. “The jobless claims numbers were also good and continue to show the job market is getting better, while PPI numbers didn’t show any worries about inflation.”

Fewer Americans than forecast filed for unemployment benefits last week, while wholesale prices unexpectedly declined in April, data showed. A report Wednesday indicated retail sales stagnated.

Dollar slide

The dollar had climbed nine straight months through March on speculation the first hike in almost a decade was looming. The greenback was little changed at $1.13546 per euro, after dropping 1.2 percent Wednesday.

Concern the Fed would raise interest rates even with worsening economic data has whipsawed stocks between gains and losses in the past six weeks. The S&P 500 is heading for a 0.1 percent drop this week, and is 0.2 percent below its record close on April 24.

The Dow Jones Industrial Average jumped 0.9 percent, as all 30 members of the index gained. Nine of 10 main S&P 500 industries advanced Thursday, with technology shares rallying a second day.

Yields on 30-year Treasuries retreated three basis points to 3.06 percent after surging seven basis points Wednesday. The U.S. plans to sell $16 billion of similar-maturity securities today after its 10-year offering yesterday attracted the most demand from investment funds and foreign central banks since 2011.

Bond slump

More than $400 billion has been wiped off the value of global bonds in May, led by a rout in German bunds. The rate on the 10-year bond slipped one basis point to 0.72 percent Thursday, its first decline this week.

“We’ve seen a reversal in what were some pretty crowded trades,” Carin Pai, director of equity strategy at Fiduciary Trust Company International in New York, said by phone. “With the ECB announcing their QE program there was a lot of pressure on European bond yields.”

The MSCI Emerging Markets Index slipped less than 0.1 percent. The Hang Seng China Enterprises gauge dropped for a third day, retreating 0.6 percent. The Shanghai Composite Index was little changed. Taiwan’s Taiex Index retreated 1.2 percent, halting a two-day advance.

Oil was little changed as investors weighed the biggest drop in U.S. refiners’ use of oil in four months against a second weekly decline in crude stockpiles in the country.

Gold futures for June delivery rose 0.6 percent to $1,225.70 an ounce. Earlier, the price reached $1,227.70, the highest for a most-active contract since Feb. 17.

Silver futures for July delivery climbed 1.8 percent to $17.535 an ounce. The price reached $17.555, the highest since Feb. 4.

–With assistance from Emma O’Brien in Wellington, Anchalee Worrachate, James Herron and David Goodman in London, Nick Gentle in Hong Kong and Oliver Renick in New York.