U.S. Stocks Rise to Records, Bonds Gain on ECB Stimulus Optimism

The Dow Jones Industrial Average rose 220 points as U.S. stock indexes powered to all-time highs after an easing of the bond selloff boosted dividend-yielding equities. Treasuries fell with European debt as speculation mounted that the region’s central bank will prolong its asset-buying program.

The 30-member blue-chip index jumped to a record as phone and REIT shares joined the post-election rally that’d been led by cyclical shares. Biotechnology companies in the S&P 500 Index tumbled the most since October after Donald Trump declared himself an opponent of high drug prices. European equities advanced for a third day. Bonds rose across the euro area, with the yield on the benchmark German bund falling from the highest in almost three weeks. Treasuries slipped and crude fell toward $50 a barrel in New York.

U.S. stocks had been struggling to add to a post-election rally that took major indexes to all-time highs in late November amid a selloff in bonds that weighed on large parts of the equity market. That’s reversed Wednesday, as investors are positioning for an extension of monthly asset purchases of 80 billion euros ($86 billion) by the ECB past March even as uncertainty lingers before the bank concludes two days of meetings Thursday.

Stocks

• The S&P 500 Index rose 0.9 percent to 2,232.05 at 1:54 p.m. in New York, on track for a record close. The Dow Jones Industrial Average added 256.81 points to 19,508.59, a fresh all-time high.
• REITs and phone stocks added 2.3 percent. They tend to rise when Treasuries gain and yields fall.
• Health-care shares slid 0.9 percent, the only of 11 groups to retreat. Pfizer Inc. fell 1.2 percent for the steepest slide in the Dow. Biotech stocks plunged 2.4 percent.
• The Stoxx Europe 600 Index added 0.9 percent as mining companies and banks rallied
• Credit Suisse Group AG gained 6.4 percent, while Banca Monte dei Paschi di Siena SpA rose 8.7 percent after La Stampa reported Italy will ask for a 15 billion euro ESM loan for the lender, among other banks.
• Japan’s Topix index gained 0.9 percent in Tokyo as the MSCI Asia Pacific Index added 0.4 percent.

Bonds

• Germany’s 10-year bond yield fell three basis points to 0.33 percent, after climbing to 0.38 percent, the highest since Nov. 14. The government sold 2.6 billion euros out of a planned 3 billion euros of 2018 securities.
• Italian sovereign debt securities due in a decade advanced for a second day, almost erasing losses suffered in the aftermath of Sunday’s referendum. The nation’s 10-year bond yield fell five basis points to 1.89 percent, adding to a four-basis point drop from Tuesday.
• Portugal’s 10-year bond yield reached the lowest level since Nov. 15.
• Treasury 10-year note yields were little changed at 2.36 percent.
• The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies dropped one basis point to 74 basis points, the lowest since Nov. 9. A gauge of swaps on junk-rated companies fell to a three-month low.

Commodities

• Oil fell 1 percent to $50.42 a barrel amid speculation a production boost from U.S. shale producers will counter the first output cuts from OPEC in eight years.
• Copper gained 0.5%, recouping an earlier decline. Steel rebar in China climbed with iron ore to the highest in more than two years, as reports of a crackdown on illegal plants spurred speculation that the government is stepping up supply-side reforms.
• Spot gold was little changed at $1,173.72 an ounce.

Currencies

• The pound dropped 0.5 percent to $1.2611 after industrial production in October fell 1.3 percent, driven by a slide in oil and gas extraction.
• The euro was little changed at $1.0725 after posting a 0.4 percent drop on Tuesday.
• Overnight volatility in the common currency versus its U.S. counterpart jumped to 23 percent, the most since June 23, based on closing prices
• The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed