Dec. 21 (Bloomberg) -- Stocks rose, completing the Standard & Poor’s 500 Index’s recovery from the plunge that followed Lehman Brothers Holdings Inc.’s collapse in 2008, and commodities gained as U.S. retail sales and earnings forecasts fueled optimism in the world’s largest economy.
The Standard & Poor’s 500 Index gained as much as 0.4 percent to 1,252.62 at 10:09 a.m. in New York, above its level on Sept. 12, 2008, the last session before Lehman filed a record bankruptcy and intensified the financial crisis. Copper and cotton rose to records. The cost to insure Portuguese bonds against default climbed after Moody’s Investors Service said the nation’s bond rating may be cut. The euro erased early gains.
The S&P 500 climbed for a fourth straight day as earnings forecasts topped estimates at Adobe Systems Inc. and Jabil Circuit Inc. and the International Council of Shopping Centers and Goldman Sachs Group Inc. said same-store retail sales last week increased 4.2 percent from 2009. Chinese Vice Premier Wang Qishan said China “has taken steps to help some EU members counter the sovereign-debt crisis.” China holds $2.65 trillion in foreign-exchange reserves.
“There’s increased confidence in what the future looks like, at least in the U.S.,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees $105 billion. “Corporate earnings and forecasts are strong and the economic picture has improved. In the event we don’t have any bad surprises from Europe, stocks will be the investment of choice.”
Korean Tensions
Stocks also climbed today as tensions on the Korean peninsula appeared to cool. North Korea indicated a willingness to avoid further confrontation with South Korea and resume talks on its nuclear program, New Mexico Governor Bill Richardson said today after an unofficial visit to the Communist country.
The advance in U.S. equities was led by banks and commodity producers, with JPMorgan Chase & Co. and Freeport-McMoRan Copper & Gold Inc. pacing gains. Adobe Systems climbed 5.8 percent in as the biggest maker of graphic-design programs forecast profit that beat analysts’ estimates. Jabil, an electronics manufacturer and designer, rallied 5.8 percent.
Today’s advance came before government data tomorrow that is forecast to show U.S. gross domestic product expanded at a 2.8 percent annual pace in the third quarter, quicker than the 2.5 percent estimate published last month, according to a Bloomberg News survey of economists.
85 Percent Surge
The economic expansion starting in June 2009 has driven an 85 percent surge in the equity index since it sank to a 12-year low of 676.53 on March 9, 2009, restoring about $7 trillion of equity value.
U.S. government and Federal Reserve spending to stimulate the economy, coupled with improving profits, drove the rally in equities. The index will end 2011 at 1,370, according to the average projection of 11 strategists at Wall Street’s biggest banks, producing the biggest three-year rally since 1997-2000.
Almost five companies gained for every one that fell on the Stoxx 600. Mining companies led the advance, as Rio Tinto Group jumped 2.5 percent and BHP Billiton Ltd. rallied 2.2 percent. Royal DSM NV rose 4.2 percent after agreeing to buy U.S.-based Martek Biosciences Corp. for $1.09 billion. Nordic papermakers’ shares soared after UPM-Kymmene Oyj agreed to buy paper producers Myllykoski Oyj and Rhein Papier GmbH, prompting analysts to cite improved chances for more mergers in the industry.
Asian Shares
The MSCI Asia Pacific Index jumped 1.2 percent, while the Shanghai Composite Index rallied for the first time in five days, rising 1.8 percent after a survey showed property sales increased in most Chinese cities during the past week.
The S&P GSCI index of 24 commodities climbed as much as 0.6 percent to the highest level since Oct. 1, 2008, led by a 3.2 percent jump in cotton futures on demand in China, the world’s largest buyer of the fiber. Copper climbed 1.9 percent to $9,377 a metric ton and earlier today jumped to an all-time high of $9,392 a ton.
Moody’s said it may cut Portugal’s bond grade by one or two levels, citing the economy’s “sluggish” growth outlook.
The yield on the Portuguese 10-year bond increased two basis points to 6.71 percent, while the extra yield investors demand to hold the securities instead of benchmark German bunds rose for a third consecutive day. The yield on the 10-year U.S. Treasury dropped four basis points to 3.30 percent.
Air travel disruptions rippled across Europe for a fourth day in the countdown to Christmas as most of Frankfurt airport was closed this morning after heavy snowfall. London’s Heathrow airport is operating at a third of capacity as snow, ice and frigid temperatures turned rail and road travel into chaos.
