U.S. Stocks Rise on Citigroup Earnings, Speculation of More Fed Easing
U.S. stocks rose to a five-month high, led by financial shares, after Citigroup Inc.’s earnings topped estimates and an unexpected drop in industrial production added to signs the Federal Reserve will help fuel the recovery.Citigroup, the bank 12 percent-owned by U.S. taxpayers, rallied 5.4 percent to lead a measure of financial shares to the biggest gain among 10 groups. Hasbro Inc., the second-largest toymaker, advanced 3.8 percent after reporting higher-than- estimated earnings as sales of preschool products gained. Halliburton Co., the second-biggest oilfield-services provider, slumped 4.8 percent as profit missed some analysts’ estimates. The S&P 500 climbed 0.7 percent to 1,184.71 at 4 p.m. in New York, the highest level since May 3. The gauge gained 1 percent last week after Fed Chairman Ben S. Bernanke said the economy may need further stimulus and earnings boosted investor confidence. TheDow Jones Industrial Average rose 80.91 points, or 0.7 percent, to 11,143.69. “We remain positive on the market based on decent earnings and the Fed’s expected actions,” said Stewart Beach, who oversees $1.1 billion as chief investment strategist at Old Second National Bank in Aurora, Illinois. “Even Citigroup beat earnings, which is kind of amazing considering the problems we’re seeing on the foreclosure front.” The S&P 500 has rallied 13 percent since Bernanke said at the Fed’s August conference in Jackson Hole, Wyoming, that he has the tools to prevent another recession. The Fed chief said on Oct. 15 that there’s a case for “further action” by the central bank in the form of additional monetary stimulus because inflation is too low and unemployment is too high.
Treasuries Gain on Prospects Federal Reserve Will Step Up Asset Purchases
Treasuries rose, rallying from the biggest weekly slump this year, as an unexpected slide in U.S. industrial production last month bolstered speculation the Federal Reserve will purchase the debt as a way to inject more cash into the economy.
The gains pushed down 10-year Treasury yields from near the highest level this month. Atlanta Fed President Dennis Lockhart said he may back a second round of purchases of Treasury securities by the central bank to ensure against the possibility of falling prices. Policy makers meet in two weeks. “The overriding factor in this market is the anticipation of asset purchases by the Fed,” said Larry Milstein, New York- based managing director of government and agency debt trading at R.W. Pressprich & Co., a fixed-income broker and dealer for institutional investors. “The big question is how big it will be.” The yield on the 10-year note dropped five basis points, or 0.05 percentage point, to 2.51 percent at 4:34 p.m. in New York, according BGCantor Market Data. The price of the 2.625 percent security due in August 2020 rose 3/8, or $3.75 per $1,000 face amount, to 100 31/32. The yield touched 2.59 percent on Oct. 15, the highest level this month. It increased 17 basis points last week, the most since the period ended Dec. 25. The 30-year bond yield fell three basis points to 3.95 percent, and the two-year yield touched 0.3508 percent, the least since reaching a record-low 0.3270 on Oct. 12. | 
