S&P 500 Climbs to Highest Since 2008 on Earnings

Stocks surged, sending the Standard & Poor’s 500 Index to its highest level since June 2008, as earnings at companies from Ford Motor Co. (F) to 3M Co. beat analyst estimates. Treasuries rose and the dollar fell versus the euro for a sixth day as a Federal Reserve policy meeting began.

The S&P 500 increased 0.9 percent to 1,347.24 at 4 p.m. in New York and the Stoxx Europe 600 Index gained 0.3 percent. The dollar matched the longest losing streak versus the euro in almost two years amid speculation the Fed will consider measures to keep interest rates low. Ten-year Treasury yields slid five basis points to 3.32 percent, the lowest level in a month. Oil was little changed at $112.21 a barrel and gold and silver fell.

Before today, the S&P 500 had failed to top its 2011 high reached on Feb. 18 even as it closed less than 1 percent below the peak on eight days in April. Stocks rallied today as Ford, 3M and United Parcel Service Inc. (UPS) joined the 79 percent of S&P 500 companies that have topped analyst earnings estimates since April 11. Investors also awaited the end of a Fed meeting tomorrow to gauge the central bank’s outlook for interest rates and its economic stimulus program known as quantitative easing.

“Corporate performance is excellent,” said Stephen Wood, the New York-based chief market strategist for Russell Investments, which manages about $155 billion. “The underlying economic performance in the United States has been a pleasant surprise. Our expectation is that the Fed ends QE2 in the summer and the growth baton will be handed from policy to the private economy. That’s providing rationale for the stock market to move forward.”

Dollar Index, S&P 500

The Dollar Index, used to track the U.S. currency against six trading partners, fell 0.3 percent to 73.779, the lowest since August 2008 on a closing basis, on speculation the Fed will signal plans to keep interest rates near zero for an extended period. Twelve of 16 major peers rose against the U.S. currency, with the euro strengthening 0.4 percent to $1.4642.

The S&P 500 rose for the fourth time in five days, erasing yesterday’s decline. Industrial companies rose 1.8 percent as a group to lead gains among all 10 of the index’s main industries. Ford, the second-largest U.S. carmaker, climbed 2.4 percent after first-quarter profit grew 22 percent to the most in the period since 1998 amid higher prices for fuel-efficient models.

3M Co. (MMM) said it had first-quarter profit of $1.49 a share, topping the average analyst estimate of $1.44 a share. The stock rose 1.9 percent. UPS, the world’s largest package-delivery company, climbed 0.9 percent after also boosting its full-year forecast amid increasing demand for international shipping.

Improving Confidence

Stocks extended gains after confidence among U.S. consumers increased more than forecast in April, signaling the improving labor market is helping Americans weather rising fuel costs. The Conference Board’s confidence index rose to 65.4 from a revised 63.8 reading in March. The median forecast of economists surveyed by Bloomberg News projected an advance to 64.5.

Treasury two-year note yields lost three basis points to 0.61 percent, the lowest level in more than a month, even after the U.S. sold $35 billion of the securities at a higher-than- forecast yield. The notes drew a yield of 0.673 percent, compared with a forecast of 0.669 percent in a Bloomberg News survey of 8 of the Federal Reserve’s 20 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with amount of securities offered, was 3.06, below the 3.42 average at the past 10 sales.

Five stocks climbed for every two that fell in the Stoxx Europe 600. UBS AG (UBSN), Switzerland’s largest bank, rallied 3.9 percent after attracting the highest wealth management inflows since the end of 2007 in the first quarter. Parmalat SpA (PLT) jumped 11 percent after Groupe Lactalis bid for holdings in Italy’s biggest dairy company it doesn’t already own.

China Slumps

The MSCI Emerging Markets Index was little changed after China’s Shanghai Composite Index slid 0.9 percent. Industrial & Commercial Bank of China Ltd. lost 0.3 percent in Hong Kong after the world’s largest lender by market value and three rivals were told last month to maintain capital adequacy ratios of at least 11.8 percent in 2011, one person said, declining to be identified as the plan isn’t public. Agricultural Bank of China Ltd., the nation’s fourth biggest, should target 11.7 percent, two people said.

Yields on government securities from Greece, Ireland and Portugal reached records amid speculation the heavily indebted nations won’t be able to avoid restructuring. Costs to insure Greek and Portuguese debt climbed to records.

The yield on Irish two-year government notes climbed to a euro-era record of 12.09 percent. Portuguese two-year yields touched a euro-era record of 11.74 percent.

The yield on Greece’s 10-year bonds rose as much as 47 basis points to 15.38 percent. Greece’s 2010 budget gap was 10.5 percent of gross domestic product, more than a percentage point wider than the government estimated, according to figures from Europe’s statistics agency today.

Credit-default swaps on Greek government bonds increased 13 basis points to 1,345 basis points and Portuguese swaps climbed six basis points to 666.