U.S. Stocks Climb on Economic Data

U.S. stocks rose, halting a three- day slump, as improving data on jobless claims and home sales bolstered confidence in the economy and diverted attention away from the budget impasse. European shares fell as earnings missed estimates. Treasuries and the dollar gained.

The Standard & Poor’s 500 Index added 0.4 percent to 1,310.16 as of 10:46 a.m. in New York after tumbling 2 percent yesterday, while the Stoxx Europe 600 Index lost 0.3 percent. The Dollar Index increased 0.2 percent, while the yen climbed versus 13 of 16 major peers monitored by Bloomberg. The yield on the 10-year Treasury note fell two basis points to 2.96 percent, while Italy’s yield rose nine points after a debt sale.

Equities recovered some of yesterday’s sell-off as initial jobless claims decreased below 400,000 for the first time since April and contracts to buy previously owned homes unexpectedly increased 2.4 percent. The House of Representatives plans to vote today on a debt-limit increase proposal that confronts unified Democratic opposition in the Senate, setting the stage for a congressional showdown to avert a U.S. default.

“The jobless claims report provided a temporary reprieve for markets amid so much other disturbing news,” Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC, said in a telephone interview. The Philadelphia- based firm manages about $54 billion. “It’s a hint that there may be turnaround after the loss of momentum in the economy that we’ve experienced coupled with Washington not helping to generate any enthusiasm for equities at the moment.”

Moving Together
Stocks and Treasuries are moving in tandem twice as often as they normally do, a sign investors are growing convinced the U.S. will lose its AAA credit rating and that an impasse among lawmakers may spur losses in both markets.

The S&P 500 has risen or fallen together with 10-year Treasury notes 80 percent of the time in the last 10 days, compared with the average since 2000 of 41 percent, according to data compiled by Bloomberg.

Passage of the House debt-ceiling measure, which all 51 Senate Democrats and two independents oppose, will lead to negotiations among leaders on both sides in an attempt to avert a U.S. default.

The S&P 500 tumbled 2 percent yesterday, its biggest loss since June 1, and has declined 2.9 percent since July 8, the day before Alcoa Inc. unofficially started the earnings season on July 11, even as four companies beat analyst estimates for every one that missed, according to data compiled by Bloomberg. In Europe’s Stoxx 600, more companies have trailed projections than surprised positively.

Jobless Claims Drop
Jobless claims fell by 24,000 to 398,000 in the week ended July 23, fewer than forecast, Labor Department figures showed today in Washington. The median estimate of economists in a Bloomberg News survey called for a drop to 415,000.

Cisco Systems Inc. rallied 3 percent to lead gains in the Dow Jones Industrial Average after Goldman Sachs Group Inc. advised buying the shares. DuPont Co. climbed 2.1 percent after raising its full-year earnings forecast

Exxon Mobil Corp. fell 1.5 percent after reporting second- quarter profit of $2.18 a share, compared with a $2.32 average estimate of seven analysts in a Bloomberg survey.

The four-day drop in the Stoxx 600 is the longest losing streak in seven weeks. Credit Suisse Group AG (CSGN), Switzerland’s second-biggest bank, lost 2.4 percent after second-quarter profit fell 52 percent, and BASF SE, the world’s largest chemical company, sank 4.9 percent after signaling growth will slow. Air France-KLM Group and Deutsche Lufthansa AG, Europe’s biggest airlines, fell more than 3.4 percent as earnings missed estimates.