U.S. Stocks Rise to Records While Oil Drops; Ruble Gains

New York (Dec 22)  U.S. stocks extended their climb, with benchmark indexes rising to records as gains in technology shares offset losses among drugmakers. Energy producers resumed a selloff as crude sank with gold, while the ruble strengthened.

The Standard & Poor’s 500 Index added 0.4 percent to an all-time high of 2,078.54 by 4 p.m. in New York, while gains in Intel Corp. and International Business Machines Corp. led the Dow Jones Industrial Average (INDU) up 0.9 percent, also to a record. Oil traded in the U.S. and London slipped at least 2 percent, halting a four-day rally in S&P 500 energy stocks. Natural gas futures fell to a two-year low. Gold futures declined the most in more than two weeks. The ruble climbed on speculation exporters are selling foreign currency amid government pressure.

Equities globally have been climbing since the Federal Reserve indicated last week that it will probably hold interest rates near zero at least through the first quarter, even as the U.S. economy shows signs of strength. An update on third-quarter gross domestic product is due tomorrow. Chinese ministers offered support for Russia, expanding a currency swap between the two nations as President Vladimir Putin seeks to shore up the ruble without depleting foreign-exchange reserves.

“Once the trend got turned last week, given the time of the year, it became a perfect storm to the upside,” Walter Todd, who oversees about $1 billion as chief investment officer for Greenwood, South Carolina-based Greenwood Capital Associates LLC, said by phone. “Absent something from left field overseas or anything else unforeseen, stocks will continue to move higher and maybe approach that 2,100 level on the S&P by the end of the year.”

Fifth Rebound

The S&P 500 completed its fifth recovery this year from a decline of 4 percent or more, just 17 days after it started, data compiled by Bloomberg show. In comparable drops beginning in January, April, July and September, the S&P 500 needed about a month to erase losses, the data show.

A slide in oil prices and the worsening financial crisis in Russia rippled through markets earlier this month, wiping more than $1 trillion off U.S. equity values in less than two weeks. The S&P 500 lost 5 percent in seven trading days through Dec. 16.

After rising Dec. 19, oil resumed its retreat today, with West Texas Intermediate crude for February delivery dropped 3.3 percent to $55.26 a barrel in New York, extending its slide this year to 44 percent. Brent crude for February settlement slipped 2.1 percent to $60.11 per barrel in London, after jumping 3.6 percent Dec. 19, its steepest one-day gain in two years.

Tech Gains

Saudi Arabia reaffirmed its resolve to maintain output at current levels at a conference at the weekend, fueling concern over a global supply glut in oil. Energy shares in the S&P 500 fell 1 percent, after rallying 9.7 percent last week.

Eight of the S&P 500’s 10 main industry groups advanced today, with technology shares rising 1.1 percent and telephone stocks up 1 percent. Intel and IBM gained at least 1.8 percent, while Apple Inc. added 1 percent. The Nasdaq 100 Index rose 0.3 percent, while the Russell 200 Index of small-cap stocks added 0.5 percent to close at its highest level since July 3.

Gilead Sciences Inc. sank 14 percent after its hepatitis C drug was blocked by a drug-benefit manager. Health-care shares sank 1.2 percent as a group on the S&P 500, contributing the biggest decline. Trading in S&P 500 stocks was 7.4 percent below the 30-day average, according to data compiled by Bloomberg.

Christmas Week

“It’s going to be pretty tough to divine anything meaningful from the market this week with Christmas coming up on Thursday and with trading desks half-staffed,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said by phone. “If anything, you’re likely to see more impetus to show more equity positions and less cash going into year end.”

After the close of European trading, S&P revised its outlook for the ratings of oil companies Total SA (FP), BP Plc and Royal Dutch Shell Plc to negative, citing the deterioration in the forecast for crude prices. The Stoxx Europe 600 Index gained 0.5 percent today.

The ratings service earlier raised its forecast for U.S. gross domestic product in 2015, saying lower oil prices may spur consumer spending. S&P now forecasts the U.S. economy to grow next year by 3.1 percent, up from 3.0 percent. The report boosted the S&P 500 index (SPX) briefly above its Dec. 5 closing record, capping a five-day gain of 5.8 percent, the most in two months.

Chinese Help

Economists surveyed by Bloomberg predict annualized growth in U.S. gross domestic product will be revised up to 4.3 percent for the three-month period, from a previous estimate of 3.9 percent.

The ruble strengthened 4.7 percent to 55.80 a dollar in Moscow, bringing its two-day appreciation to about 9.3 percent. The Micex Index rose 0.8 percent today.

China will provide Russia with help if needed and is confident the country can overcome its economic difficulties, Foreign Minister Wang Yi was cited as saying in Bangkok in a Dec. 20 report by Hong Kong-based Phoenix TV.

OAO Rosneft rallied 2.5 percent after it repaid $7 billion in debt and said it’s generating enough dollars to meet the obligations taken on to buy TNK-BP last year and become the world’s largest traded oil producer.

The yen fell for a fourth day against the greenback, losing 0.5 percent to 120.08 per dollar, the longest losing streak in a month, as stabilizing oil prices reduced demand for haven currencies. The euro was little changed at $1.2226 after earlier sliding to $1.2220, matching its weakest level since August 2012. The 18-member currency advanced 0.5 percent to 146.82 yen.

Emerging Markets

Yields on German 10-year (GDBR10) bonds were little changed at 0.60 percent, and rates on similar-maturity U.S. Treasuries were also steady, at 2.16 percent. Yields on Spanish (GSPG10YR) and Portuguese (GSPT10YR) 10-year bonds fell to record lows today.

Stocks in developing nations climbed for a fourth day, with the MSCI Emerging Markets Index rising 1.3 percent as investors bet on a stabilization in oil prices and that China will step up measures to support economic growth.

Equity gauges in the Czech Republic, Hungary, Poland and Turkey climbed, while Dubai’s DFM General Index added 2.3 percent, trimming its plunge this quarter to 24 percent.

The Bloomberg Commodity Index fell 1.5 percent as natural gas, oil and metals retreated. Natural gas futures slumped 9 percent to the lowest settlement since Jan. 9, 2013. Gold futures for February delivery fell 1.4 percent to $1,179.80 on the Comex, while contracts on silver retreated 2.1 percent.

Source: Bloomberg