BLBG: Commodities Gain as China Refrains From Rate Increase
Stocks rallied, almost completing the Standard & Poor’s 500 Index’s recovery from the six-month plunge that followed Lehman Brothers Holdings Inc.’s bankruptcy, and commodities gained after China refrained from raising interest rates. Treasuries and the U.S. dollar dropped.
The S&P 500 rose 0.3 percent to 1,243.71 at 10:15 a.m. New York time. It closed at 1,251.70 on Sept. 12, 2008, the last trading session before Lehman’s collapse spurred a 46 percent drop through March 9, 2009. The MSCI All-Country World Index gained 0.7 percent. The S&P GSCI Index of commodities climbed 1.5 percent. Treasuries dropped before tomorrow’s Federal Reserve meeting, pushing 10-year yields to a six-month high of 3.39 percent, on speculation Congress will pass President Barack Obama’s agreement to extend tax cuts.
While Chinese inflation accelerated to the fastest pace in more than two years, the central bank kept its benchmark interest rate unchanged. The helped boost optimism that the world’s fastest growing major economy will keep fueling the global expansion.
“There’s a sense of relief that there wasn’t further tightening by officials in China,” said Liam Dalton, president of Axiom Capital Management Inc. in New York, which oversees $1.4 billion. “The main event is to sell bonds and to hold onto stocks because the underlying improvement is what the market’s acting upon right now.”
U.S. government and Federal Reserve spending to stimulate the economy, 70 percent of S&P 500 companies beating profit estimates for a record six straight quarters and bond yields dropping to all-time lows have helped drive the S&P 500’s rebound since March 2009. The index will end 2011 at 1,379, according to the average projection of 11 strategists at Wall Street’s biggest banks, producing the biggest three-year rally since 1997-2000.
To contact the reporter on this story: Nick Baker in New York at nbaker7@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.
