NEW YORK (Reuters) - U.S. stock markets rose on Monday on encouraging economic data and after optimistic comments from billionaire investor Warren Buffett, while the dollar hit a 3-1/2-month low against a basket of major currencies.
World equities, measured by the MSCI All-Country World Index .MIWD00000PUS, added 0.8 percent, after rising 1.1 percent on Friday. The global index is up 2.4 percent this month, on track for a third straight monthly rise.
The dollar slid against a currency basket ahead of U.S. Federal Reserve Chairman Ben Bernanke’s testimony before congressional committees on Tuesday and Wednesday.
Brent crude oil futures edged lower for the day as more production from Saudi Arabia helped offset supply disruptions due to turmoil in Libya.
For the month, though, Brent crude oil prices surged 10.68 percent — the biggest percentage gain since May 2009, when prices soared 29 percent. It touched a 29-month high near $120 a barrel last week.
On Wall Street, investors’ mood got a lift from some upbeat economic data and a positive outlook from Buffett.
An index of U.S. Midwest business activity rose unexpectedly in February, according to the Institute for Supply Management-Chicago, while U.S. personal income shot up 1 percent in January, Commerce Department data showed.
Buffett, chairman of Berkshire Hathaway Inc (BRKa.N), told shareholders in his widely read annual letter that he sees the need for “major acquisitions,” a sign stocks may be cheap. Berkshire’s Class B (BRKb.N) shares rose 2.8 percent to $87.28.
Ventas Inc (VTR.N) said it will buy Nationwide Health Properties NHP.N for $5.8 billion (3.6 billion pounds) in a stock deal that strengthens its position as the biggest U.S. owner of senior housing. NHP shares jumped 9.7 percent to $42.74.
“We expect M&A activities to dramatically accelerate this year,” said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
S&P 500 UP 3.2 PCT FOR MONTH
James Bullard, president of the St. Louis Federal Reserve, also gave stock investors reasons to be optimistic with his comments that the U.S. economy should do well in 2011 and oil prices are not currently a drag on the recovery.
U.S. stocks racked up a third month of gains. The benchmark Standard & Poor's 500 .SPX rose 3.2 percent for the month, while the blue-chip Dow Jones industrial average gained 2.8 percent and the Nasdaq added 3 percent.
The market has defied expectations for a major correction, despite rallying since September. The S&P 500 is up 26 percent since the start of September.
The dollar, however, came under pressure on expectations that Fed Chairman Ben Bernanke, in testimony to congressional committees later this week, will stick with his recent economic assessment that the recovery is strengthening, but not enough to bring about a significant improvement in the jobs market.
The Dow Jones industrial average .DJI gained 95.89 points, or 0.79 percent, to end at 12,226.34. The S&P 500 advanced 7.34 points, or 0.56 percent, to finish at 1,327.22. The Nasdaq Composite Index .IXIC added 1.22 points, or 0.04 percent, to close at 2,782.27.
Limiting the Nasdaq’s advance was a downgrade by UBS of online retailer Amazon Inc (AMZN.O) to “neutral” from “buy,” due to higher costs. Amazon was down 2.2 percent at $173.36.
Brent crude oil prices were volatile, following a spike last week on worries over supply disruption from the Middle East and North Africa. Brent crude slipped 34 cents to settle at $111.80 a barrel.
The uprising in Libya has cut as much as three-quarters of the country’s oil output, prompting Saudi Arabia to step in and plug the supply gap to Libya’s oil buyers.
The gains raised worries about its effect on the global economic recovery.
“If oil prices rise further, it will restrain economic growth. But with no further escalations, at current levels it isn’t going to cause a recession,” said Jason Pride, director of investment strategy at Glenmede Investment and Wealth Management in Philadelphia.
Spot gold stayed above $1,400 an ounce, reflecting investors’ safe-haven bid due to turmoil in the Middle East and North Africa.
The U.S. dollar fell versus a currency basket as investors speculated that this week Fed chief Bernanke will signal continued support for the central bank’s quantitative easing program.
Bernanke is scheduled to testify before key congressional committees on Tuesday and Wednesday. Expectations are that he will reiterate his view of an economic recovery that is still not strong enough to significantly reduce the jobless rate, suggesting the time is not ripe for U.S. interest rates to rise.
The ICE futures exchange’s U.S. dollar index .DXY, which tracks the greenback’s performance against a basket of major currencies, was down 0.5 percent. Earlier, the index hit its lowest level since November 9.
U.S. Treasury prices were mixed, with Federal Reserve purchases and subdued consumer spending in January seen as supportive.
Commerce Department data showed U.S. consumer spending was weaker than expected, down 0.1 percent in January, the first decline in a year.
The yield of the benchmark 10-year U.S. Treasury note stood at 3.42 percent, unchanged from late last week.
“Look for (investors) to have ‘one foot’ in the Treasury market, and ‘one foot’ in something offering a higher return, as investors go back and forth, depending how the wind blows on some key global issues,” said Kevin Giddis, president of fixed income capital markets at Morgan Keegan in Memphis, Tennessee.
According to fund tracker EPFR Global, a growing aversion to risky assets in the latest week fuelled the biggest flows to global bond funds in more than three months, and turned more investors away from emerging market stocks.
The rotation out of emerging markets into developed markets, partly driven by inflation concerns in emerging economies, has led to outperformance in developed markets. The MSCI emerging market index .MSCIEF has lost 4.2 percent this year.
Credit Suisse’s private bank expected the fund rotation to ease in the second quarter.
In Europe, the pan-European FTSEurofirst 300 index .FTEU3 of top shares closed 0.8 percent higher at 1,169.24 points.
Reporting by Caroline Valetkevitch; Additional reporting by Edward Krudy, Ryan Vlastelica, Ellen Freilich and Wanfeng Zhou in New York, and Dominic Lau in London; Editing by Jan Paschal