U.S. stocks erased early losses as improving sales at retailers and automakers helped bolster confidence in the economy. A drop in Treasuries sent 10-year yields to 2 percent for the first time in a week. The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,277.3 after losing 0.7 percent earlier. The Dow Jones Industrial Average climbed 20.97 points, or 0.2 percent, to 12,418.42. Ten-year Treasury yields gained as much as six basis points to 2.01 percent before trading at 1.99 percent. T
The S&P 500 added to yesterday’s 1.6 percent rally as Ford Motor Co. jumped after December sales beat estimates to help U.S. carmakers cap their best year since 2008, while the International Council of Shopping Centers increased its estimate for last month’s same-store sales. U.S. equities followed European shares lower earlier as UniCredit SpA’s plan to sell shares fueled concern European banks need to raise capital and U.S. factory orders trailed estimates.
“We started the day with a bit of a pullback from yesterday’s strong rise and then the data that we got this morning helps the market and firms up the conviction that the U.S. economy is doing well,” Giri Cherukuri, head trader for Oakbrook Investments, which manages $2.7 billion in Lisle, Illinois, said in a telephone interview. “For the first few days in 2012 people don’t seem to be worried about the European threat.”
Companies that rely on discretionary consumer spending helped lead gains among 10 groups as Ford, Home Depot Inc. and Lowe’s Cos. rallied. Ford’s December light-vehicle deliveries rose 10 percent to 209,447, exceeding the average estimate for a 7.7 percent gain. General Motors Co. and Chrysler Group LLC also reported vehicle sales that beat estimates.
Retail sales at stores open more than a year may have gained as much as 4.5 percent in December, more than a previous estimate of as much as 4 percent, the ICSC said in a statement today. Sales at retail chains last week rose 5.3 percent from a year earlier, according to the New York-based researcher.
Consumer-discretionary companies, a group that includes retailers, clothing makers and hotel and restaurant chains, climbed 4.4 percent in 2011 for the fourth-best advance among the 10 main groups in the S&P 500.
Financial shares in the S&P 500 pared earlier declines as Bank of America Corp. climbed.
European Banks Slip
Banks lost 1.6 percent to lead declines in the Stoxx Europe 600 Index, which slipped 0.6 percent after reaching a five-month high yesterday. UniCredit SpA, Italy’s largest bank, tumbled 14 percent to 5.42 euros, the lowest closing price since 1992, as the bank said it will sell new shares in a 7.5 billion euro ($9.8 billion) offer to strengthen its capital position.
Portugal’s two-year note yield extended declines after borrowing costs dropped at a bill sale, dropping 152 basis points to 14.57 percent. The government sold 1 billion euros of three-month bills at average yield of 4.346 percent, down from 4.873 percent at a previous auction.
Germany’s 10-year debt yield rose three basis points to 1.92 percent. The government sold 4.06 billion euros of bonds, after getting bids for 5.14 billion euros, more than the maximum sales target of 5 billion euros, at an average yield of 1.93 percent.
The yield on Spain’s 10-year bonds rose 15 basis points, sending the difference in yield with bunds 12 basis points wider to 3.51 percentage points.
Spanish Prime Minister Mariano Rajoy’s government may apply for loans from the European Union’s rescue fund and the International Monetary Fund to help restructure the country’s financial industry, Expansion reported, citing unidentified people with knowledge of the matter. Spain has no plans to seek external help to fund its overhaul of the industry, said Carmen Martinez Castro, the deputy minister for communication.
‘Long-Term Adjustment’
The euro weakened 0.8 percent against the yen as it declined against 13 of 16 major peers. The yen strengthened against 15 of its 16 most-traded peers.
“The euro zone is in a long-term adjustment process,” Neil Mellor, a strategist at Bank of New York Mellon Corp. in London, said in a report. “Whether certain member states will be prepared to stick it out for the long run should they ride out the liquidity crisis relatively unscathed remains to be seen.”
Euro-area banks parked 453.2 billion euros with the Frankfurt-based ECB yesterday, up from 446 billion euros the previous day. That’s the highest since the euro’s introduction in 1999. Banks are depositing excess cash back with the ECB at the overnight rate of 0.25 percent, rather than lending it for more elsewhere.
