Sept. 3 (Bloomberg) -- Stocks rallied, extending the first weekly gain in a month for the Standard & Poor’s 500 Index, while Treasuries and gold tumbled as better-than-estimated growth in private payrolls bolstered optimism the economy will avoid relapsing into a recession. The S&P 500 surged 1.2 percent to 1,103.25 at 9:39 a.m. in New York and is up 3.7 percent this week. The MSCI World Index of stocks in 24 developed markets added 1.2 percent. The drop in 10-year Treasuries sent yields up 12 basis points to 2.74 percent and gold sank 0.8 percent to $1,243 an ounce as investors pursued riskier assets. Oil erased earlier declines, while lead and nickel paced gains in industrial metals.
Stocks have rallied this week, adding about $1.2 trillion to the value of global equities, and Treasuries slid as reports on manufacturing and home sales tempered speculation the economic rebound is in peril. Today’s data showed private payrolls excluding government jobs rose by 67,000 after a revised 107,000 increase in July that was more than first estimated, easing concern unemployment will thwart the recovery.
“It’s encouraging to see that the labor market is not deteriorating further,” said Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which manages $280 billion. “It’s not a blowout number, but it provides some instant relief. The numbers suggest this is only a soft spot for the economy rather than a double dip.”
Financials, Industrials Lead
Financial and industrial companies jumped at least 1.6 percent as all 10 industry groups in the S&P 500 advanced. Home Depot Inc., Bank of America Corp. and General Electric Co. rallied at least 2.7 percent to lead gains in all 30 companies in the Dow Jones Industrial Average.
Yields on 30-year U.S. bonds rose 11 basis points to 3.83 percent, while 2-year yields climbed 3 basis points to 0.53 percent.
The U.S. bond market is signaling that the world’s largest economy will probably avoid slipping back into a recession. The economy has never contracted with the difference between short- and long-term Treasury yields as wide as it is now. That gap, at 2.2 percentage points for 2- and 10-year notes, signals a recession in the next year is unlikely, according to the Federal Reserve Bank of Cleveland.
European Shares
The Stoxx Europe 600 Index rose 1.4 percent, extending this week’s advance to 4.2 percent. Neopost SA, the French mailroom- equipment maker, gained 3.5 percent as revenue increased. The MSCI Asia Pacific Index climbed 0.4 percent.
The MSCI Emerging Markets Index rose 0.9 percent, heading for the biggest weekly advance since early July. Taiwan’s benchmark Taiex index climbed the most in a month, led by flat- panel maker Chimei Innolux Corp. on speculation fourth-quarter demand for consumer electronics will improve. Emerging- market stocks may outperform for the rest of the year as below-trend growth and low inflation in developed nations drive inflows to “healthy” developing economies, JPMorgan Chase & Co. analysts led by Adrian Mowat in Hong Kong wrote in a report today.
The yen and dollar fell against most major peers after the payrolls report fueled investor appetite for risk.
The yen weakened 0.9 percent to 85.01 per dollar and dropped 1 percent to 109.19 per euro. The dollar fell 0.1 percent to $1.2839 per euro.
Wheat for delivery in December increased 1.1 percent to $7.2175 a bushel on the Chicago Board of Trade, the third consecutive advance. Prime Minister Vladimir Putin yesterday extended Russia’s export ban on grains and flour to see how next year’s harvests develop. The ban was scheduled to end Dec. 31. About a third of Russia’s grains crop this year was damaged because of the worst drought in 50 years.
Copper climbed 0.9 percent to $3.5255 a pound on the Comex in New York. The October crude oil contract rose 0.1 percent to $75.10 a barrel in New York, reversing an earlier decline amid tropical storm warnings for parts of the New England coast.
