Stocks Fall, Dollar Weakens on GDP, Jobs Reports; Gold Advances

The US dollar dropped again and this time to a 3-year low on a slower economy and increased jobless claims. Gold also continue its climb to new records breaking the $1,530/oz mark.

By Stephen Kirkland
Apr 28, 2011 5:58 AM MT
BLOOMBERG

U.S. stock-index futures fell and the Dollar Index dropped to a three-year low as reports showed the economy slowed more than forecast and jobless claims unexpectedly rose. Gold climbed to a record.

Standard & Poor’s 500 Index futures declined 0.2 percent at 8:45 a.m. in New York, and the Stoxx Europe 600 Index gained less than 0.1 percent. The Dollar Index retreated for an eighth day, the longest losing streak since March 2009, slipping 0.4 percent to 73.193. Gold jumped to $1,534.05 an ounce and copper rose 0.7 percent.

U.S. gross domestic product rose at a 1.8 percent annual rate from January through March, less than the 2 percent growth forecast in a Bloomberg survey, Commerce Department figures showed. Jobless claims increased to the highest in three months, the Labor Department said. The Federal Reserve yesterday renewed its pledge to keep interest rates low for an extended period.

“The monetary policy stance of the Fed implies that low interest rates will continue to support the hunt for yield and spur risk appetite,” Tim Brunne, a credit strategist at UniCredit SpA in Munich, wrote in a note to investors.

The dollar weakened as much as 0.6 percent against the euro, falling for the eighth day and breaching $1.48 for the first time since December 2009. It dropped 0.5 percent versus the yen.

The decline in U.S. futures indicated the S&P 500 may fall from the highest level since June 2008. Jobless claims increased by 25,000 to 429,000 in the week ended April 23, the most since late January, according to Labor Department figures.

Exxon, P&G

Exxon Mobil Corp. (XOM)’s first-quarter net income rose to $2.14 a share from $1.33. The stock was little changed in pre-market trading. Procter & Gamble Co. (PG) fell 1.4 percent in pre-market trading after reporting third-quarter profit of 96 cents a share, less than the average estimate of 97 cents in a Bloomberg survey of analysts. Bristol-Myers Squibb Co., whose top-selling blood thinner Plavix faces generic competition next year, said first-quarter profit climbed 33 percent, topping estimates. The shares were little changed.

P&G and Exxon were among 59 companies in the S&P 500 releasing earnings today. Seventy-seven percent of companies in the S&P 500 that have reported results since April 11 have exceeded analysts’ per-share profit forecasts, according to data compiled by Bloomberg. Starbucks Corp., the world’s largest coffee-shop operator, fell 2.2 percent in German trading today as second-quarter profit matched analysts’ projections.

Exelon Corp. said it agreed to buy Constellation Energy Group Inc. for $7.9 billion, or about $38.59 a share. Constellation jumped 5 percent.

Deutsche Bank, Shell

Three stocks advanced for every one that declined in the Stoxx Europe 600 Index. Deutsche Bank AG (DBK), Germany’s biggest bank, surged 3.8 percent and Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, advanced 0.5 percent after earnings beat estimates. SAP AG (SAP), the largest maker of business-management software, slid 6.3 percent after reporting a smaller-than- expected increase in profit.

The MSCI Asia Pacific Index increased 1.3 percent to a two- month high as Japan’s Nikkei 225 (NKY) Stock Average rallied 1.6 percent.

China’s Shanghai Composite Index fell for a fifth day, dropping 1.3 percent on speculation the government will increase interest rates as soon as next week to tame inflation. Indian benchmark index dropped 0.8 percent, declining for a fourth day, after food inflation accelerated to a three-week high.

Corn advanced 1 percent as rains in the Midwest, the biggest U.S. growing region, threatened to further delay sowing.

The yield on the two-year Greek note slid 39 basis points after surging as much as 87 basis points to 26.27 percent, the highest since before the euro was introduced in 1999. The yield on the 10-year Irish bond rose eight basis points to 10.54 percent, with the similar-maturity Portuguese security’s yield falling four basis points, snapping a 10-day advance.

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.

To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net

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