US stocks up despite decrease in retail sales

US stocks rose as a report showed retail sales unexpectedly fell, bolstering the case for keeping interest rates low. The dollar weakened from a 12-year high against the euro, while Treasuries advanced with European bonds. The Standard and Poor’s 500 Index added 0.6 per cent at 9:36 a.m. in New York.

The dollar dropped 0.7 per cent to $1.0619 per euro. The Stoxx Europe 600 Index rose 0.2 per cent. The yield on 10-year Treasuries slid four basis points to 2.07 percent and Italy’s 30-year rate tumbled 8 basis points to 1.89 per cent.

Shares in Shanghai climbed to a six-week high and copper advanced for the first time in three days as China’s credit growth exceeded economists’ estimates. Sales at U.S. retailers fell in February for a third consecutive month, while jobless claims decreased more than forecast, reports showed Thursday. Speculation that the Federal Reserve is moving closer to increasing interest rates as counterparts in Europe and Asia ease policy sent the Bloomberg Dollar Spot Index up 3.6 percent in the past six days. “I think this is a question of the bad news is good news, which is a reversal of what we had Friday when we got killed,” Donald Selkin, the chief market strategist at New York-based National Securities, which oversees $3 billion, said of the retail sales report in a phone interview.

“The only reason it’s good is in policy because it throws a wet blanket over the surety of them raising rates.”

Retail sales dropped 0.6 per cent following a 0.8 per cent decrease in January, Commerce Department figures showed. The median forecast of 86 economists surveyed by Bloomberg called for a 0.3 per cent gain.

Interest rates

Initial jobless claims fell 36,000 to a three-week low of 289,000 in the period ended March 7 from a revised 325,000 in the prior week, according to the Labor Department. The median forecast called for 305,000 new applications. Concern the Federal Reserve may start raising interest rates amid a pickup in the economic recovery has weighed on equities this year. Policy makers next meet on March 17-18. The dollar weakened versus the euro for the first time in three days as investors questioned whether gains of more than 2 percent this week will prompt the Fed to soften its stance on the timing of an interest-rate increase. The dollar fell against all but one of its 16 major counterparts, weakening 0.4 per cent to the yen.

The Bloomberg Dollar Spot Index declined 0.7 per cent. Citigroup Inc. added 3.1 per cent after getting Fed approval to pay 5 cents a share in dividends and buy back as much as $7.8 billion of stock during the next five quarters, up from $1.2 billion over the past four. Morgan Stanley gained 3.5 percent after boosting its payout to 15 cents a share, from 10 cents, and saying it will buy back as much as $3.1 billion of stock. Intel Forecast Intel Corp. fell 4.3 per cent after cutting its first- quarter revenue outlook. Acadia Pharmaceuticals Inc. tumbled 23 per cent after postponing a new drug application and saying its chief executive Futures on the Dow Jones Industrial Average and on the Nasdaq 100 Index are no longer available for trade on CME Group Inc.'s electronic trading platform. The Stoxx 600 climbed for a second day after its biggest jump since Jan. 23 on Wednesday. Commodity producers advanced the most. Emerging Markets The MSCI Emerging Markets Index rose for the first time in 10 days, climbing 0.8 per cent.

Bloomberg