(Bloomberg News) Commodities rebounded from the biggest drop in two weeks after Goldman Sachs Group Inc. said it's turning "more bullish" on raw materials as demand improves. Treasuries gained and U.S. stocks retreated.
Oil and gasoline rose 1.9 percent each. The Standard & Poor's 500 Index slipped 0.1 percent to 1,316.28 at 4 p.m. in New York, its lowest close since April 19, while the MSCI All- Country World Index rose 0.3 percent after losing 1.8 percent yesterday. The euro rebounded from a two-month low versus the U.S. currency, helping send the Dollar Index down 0.3 percent. Ten-year Treasury yields lost two basis points to 3.11 percent, near their 2011 low.
The S&P GSCI Index of commodities gained 1.2 percent, recouping about three-quarters of yesterday's 1.7 percent slump, as Goldman Sachs suggested buying oil, copper and zinc in a reversal of last month's call to sell commodities, while Morgan Stanley raised its forecast for Brent crude by 20 percent. Before today, the S&P GSCI gauge had lost 11 percent since April 8, when it reached its highest level since August 2008.
"The market was pricing in a global growth story up until February, then it shifted into a supply-shock story and then within the last week or two it shifted back into a demand driven story," Jeffrey Currie, head of commodity research at Goldman Sachs in London, said in an interview today. "This shift back to a demand-driven market, albeit weaker demand, is very significant. We are substantially more confident when the market is focused on demand growth."
Silver, zinc and nickel climbed at least 2.3 percent to lead an advance in 16 of 24 materials tracked by the S&P GSCI index. Oil gained 1.9 percent to $99.59 a barrel in New York and Brent crude climbed 2.1 percent to $112.46 in London. Goldman, which correctly advised investors to sell crude oil and copper last month before a price slump, raised its 12-month prediction for Brent crude to $130 a barrel from $107.
The S&P 500 swung between gains and losses for much of the day after tumbling 1.2 percent yesterday to close at the lowest level in a month. The index remained below its average from the past 50 days after closing below the technical level yesterday for the first time in more than a month.
Chevron Corp., Alcoa Inc. and Exxon Mobil Corp. rose at least 0.8 percent for the top gains in the Dow Jones Industrial Average. General Electric Co. and Intel Corp. had the biggest losses, falling more than 1.1 percent.
Yandex NV, owner of Russia's most popular Internet search engine, jumped 55 percent in Nasdaq Stock Market trading after raising $1.3 billion in an initial public offering that sold above the proposed price range.