Stocks rose, rebounding from the biggest August slump in nine years, Treasuries fell and copper rallied as manufacturing in the U.S. and China grew faster than economists estimated. The Swiss franc weakened after reaching a record against the euro.
The MSCI World Index climbed 2.4 percent at 10:10 a.m. in New York and the Standard & Poor’s 500 Index jumped 2.5 percent, the most since July. Ten-year Treasury yields increased 14 basis points to 2.61 percent. Copper and nickel advanced more than 2 percent to pace gains in metals. The Australian dollar gained against all but one of its 16 major counterparts after the nation’s economic growth topped forecasts.
The expansion in manufacturing helped temper concern that the global economic recovery will falter as governments withdraw stimulus measures. U.S. equities trimmed gains yesterday as the Federal Reserve signaled it was unlikely to begin a second round of debt purchases imminently, according to minutes of its last meeting released yesterday.
“Investors are extremely bearish right now, so you get any kind of slightly positive news -- the Chinese PMI I would put in that camp -- and the effect can be pretty substantially positive for the market,” said David Chalupnik, who oversees $10 billion as head of equities at First American Funds in Minneapolis.
Indexes of industrial and energy companies rose almost 2 percent for the top gains among 10 groups in the S&P 500, all of which advanced. Caterpillar Inc. and Alcoa Inc. led an advance in all 30 Dow Jones Industrial Average stocks.
ISM Manufacturing
Stocks extended gains after the Institute for Supply Management’s gauge of manufacturing unexpectedly rose to 56.3 in August from 55.5 a month earlier. Readings greater than 50 signal growth. Economists forecast the index would decline to 52.8, according to the median estimate in a Bloomberg survey.
China’s purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, while Australia’s economy expanded 1.2 percent from the first quarter, according to government data released today.
U.S. equities rallied even after companies unexpectedly cut workers in August, data from a private report based on payrolls showed. Employment fell by 10,000, according to figures today from ADP Employer Services. The median estimate of 35 economists surveyed by Bloomberg News called for a gain of 15,000.
The Stoxx Europe 600 Index rose 1.3 percent as almost 10 shares advanced for every one that fell. Mining companies Xstrata Plc and Rio Tinto Plc increased more than 3 percent. Vivendi SA, owner of the world’s largest record company, rallied 4 percent after raising its profit forecast. Vinci SA, the world’s biggest builder, jumped 2.3 percent as earnings beat estimates.
‘Need to Be Selective’
The MSCI Asia Pacific Index gained 1.5 percent and the MSCI Emerging Markets Index of 21 developing countries added 1.3 percent. Benchmark indexes in Australia, Japan, South Korea, India, South Africa, Indonesia and Egypt rose more than 1 percent.
“Asian growth is still much better than the rest of the world,” said Manpreet Gill, a Singapore-based strategist at Barclays Wealth, which has $229 billion in assets. “Investors still need to be selective when buying equities as the global economic picture still looks tentative.”
The Swiss franc depreciated 0.6 percent to 1.2947 per euro. Higher-yielding currencies rose against the dollar and the yen, with the Australian dollar climbing 1.7 percent to 90.61 U.S. cents. The euro was 1.2 percent higher at $1.2833.
China’s manufacturing growth boosted raw materials prices, with the S&P GSCI Total Return index of 24 commodities rising 1.3 percent, the first increase this week. Crude oil for October delivery climbed 1.5 percent to $73.01 a barrel on the New York Mercantile Exchange.
The cost of credit-default swaps to protect Portuguese sovereign debt fell 9 basis points to 336, according to data provider CMA, as the government sold 1 billion euros ($1.3 billion) of six- and 12-month bills. The Markit iTraxx Crossover Index of default swaps on 50 mostly junk-rated European companies tumbled from a six-week high, dropping 12.5 basis points to 519.5, Markit Group Ltd. prices show.