Stocks Rise in U.S.

Stocks Rise in U.S. as Treasuries Retreat, Dollar Strengthens

By Michael P. Regan and Rita Nazareth

Jan. 19 (Bloomberg) -- U.S. stocks rose, boosted by a rally in health companies on speculation Republicans will block an industry overhaul, while Treasuries fell and a stronger dollar sent oil lower.

The Standard & Poor’s 500 Index added 0.9 percent at 10:51 a.m. in New York. Treasuries snapped two days of gains, sending the yield on the 10-year note up four basis points to 3.72 percent. The Dollar Index, which gauges the currency against six major U.S. trading partners, rallied 0.6 percent and crude retreated for a sixth day. Europe’s Dow Jones Stoxx 600 Index erased an earlier decline. British government bonds tumbled after the U.K. inflation rate increased by the most on record.

“Money is finding its way out of Treasuries and into the stock market,” said Mark Bronzo, a money manager in Irvington, New York, at Security Global Investors, which oversees $22 billion. “Investors are expecting good earnings, especially from technology companies. In addition to that, health-care stocks are rallying because a Republican victory in Massachusetts might change the debate.”

An index of health-care companies in the S&P 500 led the advance with a 1.8 percent rally. U.S. Democrats face the possibility of losing a Senate seat held for almost 47 years by the late Edward Kennedy as voters in Massachusetts go to the polls. A loss could also cost them their 60-vote Senate supermajority needed to help pass a health-care overhaul.

Ciena Corp. rallied 9 percent to lead an advance in technology companies after Credit Suisse Group AG advised buying the shares on prospects for revenue growth. As many as 65 companies in the S&P 500 are scheduled to release quarterly results this week.

Valuations Climb

The biggest stock market rally since the Great Depression boosted the S&P 500’s price-earnings multiple to 25 last week from 10.1 in March, the lowest in a quarter-century, data compiled by Bloomberg show.

The MSCI World Index of 23 developed markets added 0.3 percent after slumping 0.8 percent earlier. Companies in the measure are trading near the highest level compared with earnings since 2002, raising concern valuations may have outpaced profit growth. German investor confidence declined more than economists estimated in January as the economic recovery showed signs of losing momentum, an industry report showed.

The Dow Jones Stoxx 600 Index added 0.9 percent, reversing an earlier 0.9 percent slump.

German Confidence

The ZEW Center for European Economic Research said its index of investor and analyst expectations in Europe’s largest economy, which aims to predict developments six months ahead, fell to 47.2 from 50.4 in December. Economists predicted a drop to 50, according to the median of 37 forecasts in a Bloomberg News survey.

Cadbury Plc jumped 3.3 percent after Kraft Foods Inc. agreed to buy the chocolate maker for an increased $19.5 billion. The cost of insuring bonds sold by Uxbridge, England- based Cadbury with credit-default swaps fell 19.5 basis points to 57, the lowest level since November, according to CMA DataVision prices.

The British pound strengthened against all 16 major counterparts, gaining 1.1 percent versus the Swiss franc and 0.9 percent against the euro. December consumer prices advanced 2.9 percent in the U.K. from a year earlier, one full percentage point more than in November, according to the Office for National Statistics.

Gilts Slide

U.K. government bonds tumbled after the report, sending the yield on the two-year note 11 basis points higher to 1.31 percent.

The MSCI Asia Pacific Index declined 0.8 percent.

Aluminum Corp. of China, known as Chalco, declined 0.2 percent in Hong Kong after saying it expects to post a net loss for 2009. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank, slipped 2.4 percent in Tokyo after Barclays Plc said banks’ income from lending may slump.

Losses in Asia were limited after Hong Kong’s Hang Seng Index doubled its gain to 1 percent on a report in Caijing magazine that Shanghai, China’s financial hub, is considering allowing individuals to invest abroad.

-- With assistance from David Merritt, Justin Carrigan, Stuart Wallace, Paul Armstrong and Gavin Serkin in London. Editor: Chris Nagi