U.S. Stocks Advance as Consumer Stocks Rally Amid Data U.S. stocks rebounded after a three-day slump for the Standard & Poor’s 500 Index, as new-home sales climbed to a six-year high and health-care shares rallied with producers of consumer staples. Bed Bath & Beyond Inc. added 7.3 percent after posting quarterly profit and sales that topped analysts’ estimates. Wal-Mart Stores Inc. jumped 2.1 percent after reaching a deal to offer checking accounts to its customers. Citizens Financial Group Inc. gained 6.5 percent in its debut after raising $3 billion in an initial public offering. Health-care stocks rallied the most in the equity benchmark amid signs efforts to curtail tax-friendly overseas deals might fall short. The S&P 500 (SPX +0.84%) advanced 0.8 percent to 1,998.71 at 3:14 p.m. in New York, the most since Aug. 18. The Dow Jones Industrial Average climbed 162.31 points, or 1 percent, to 17,218.18. Trading in S&P 500 stocks was 15 percent above the 30-day average at this time of day. “We had three down days in a row, but the size of the home sales increase was a surprise,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “Stocks being cheaper than they were a few days ago prompted some buying. Stock performance this year has been good because dips haven’t lasted very long.” The S&P 500 dropped 1.4 percent during a three-day losing streak, its sixth this year, after closing Sept. 18 at a record. The gauge has not fallen four straight days since December while advancing 7.9 percent in 2014. Housing Data Data today showed new-home sales in the U.S. surged n August to the highest level in more than six years, a sign that the housing recovery is making progress. The median sales price declined 1.6 percent in August from July, the Commerce Department reported today. Prices are trending down as builders’ appetite for margin has decreased, Stan Humphries, Zillow Inc. chief economist, said in phone interview with Bloomberg First Word. Nine of the 10 main S&P 500 groups gained as health-care companies jumped 1.7 percent, after a two-day slide. Producers of consumer staples rallied 1.3 percent amid a statement from Deloitte LLP that U.S. retail sales may increase as much as 4.5 percent this holiday season, exceeding last year’s gain. Consumer-discretionary shares advanced 1.1 percent. The group had slipped 3.1 percent through yesterday after reaching a record high on Sept. 5. Small Companies Small-cap (RAY) and Internet stocks led the recent decline in U.S. equities, as investors sold speculative shares. The Dow Jones Internet Composite Index fell 2.1 percent in the previous two days, while the Russell 2000 Index lost 3.5 percent in three days. The Internet index added 1.1 percent today, while the small-cap gauge climbed 0.9 percent, the most in a month. The S&P 500 rallied last week as the Federal Reserve retained assurances that its benchmark interest rate will stay low for a “considerable time” after the central bank ends a bond-purchase program intended to spur growth. Volatility across stocks, bonds and currencies worldwide is close to record or multi-year lows, even after Fed Chair Janet Yellen cautioned last week that the central bank could pull forward the timing of a rate increase if U.S. economic performance continues to exceed expectations. The Chicago Board Options Exchange Volatility Index (VIX -9.71%), the gauge known as the VIX, decreased 9.5 percent to 13.51 today. The index had surged 24 percent over the prior three days. Dip Buying “We’ve barely seen many corrections that extended more than two days at a time,” Jasper Lawler, a London-based market analyst at CMC Markets Plc, said by telephone. “We saw a couple days of declines and people are going into the default of buying into that dip on U.S. markets. I could see us pushing into new highs. The Fed has said they’re going to be easy for a considerable period of time, so that’s still generally supportive of stocks.” Among consumer shares, Wal-Mart climbed 2.1 percent to $77.20 for the second-biggest advance in the Dow. The deal, with Green Dot Corp., builds on an expansion into financial services that U.S. banks have sought to block. The retailer closed a deal in April to provide money transfers. Green Dot rallied 24 percent to $23.30, the highest since January. Bed Bath & Beyond advanced 7.3 percent to $67.24, the highest since April. The seller of housewares and bathroom supplies also reported same-store sales that grew faster than estimated. Inversion Deals Pfizer Inc. climbed 1.1 percent. The company has approached Actavis Plc about a deal that could allow the U.S. drugmaker to move its address overseas and reduce taxes. The new rules governing such deals, called tax inversions, won’t deter Pfizer, a person with knowledge of the matter said. Medtronic Inc. was little changed after tumbling 2.9 percent yesterday, while AbbVie Inc. climbed 2.8 percent. The companies have separate pending deals that will be subject to the new rules. Citizens Financial Group, the U.S. subsidiary of Royal Bank of Scotland Group Plc, increased 6.5 percent to $22.90 after pricing its IPO at $21.50 a share. The 140 million shares were sold below the marketed range of $23 to $25, according to a statement yesterday. KB Home sank 5.3 percent to pace declines in an S&P index of homebuilders. The company reported revenue that fell short of analysts’ estimates.
Posted on: Wed, 24 Sep 2014 19:27:54 +0000
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