U.S. Stocks Surge, Led by Shares of Energy, Real-Estate Firms

By Elizabeth Stanton

Nov. 13 (Bloomberg) -- U.S. stocks rallied the most in two weeks, with the Standard & Poor's 500 Index jumping 6 percent in the final hour, as investors snapped up the cheapest energy shares on record and real-estate companies gained after CB Richard Ellis Inc. raised cash in a share sale.

Exxon Mobil Corp. and Chevron Corp. led gains in all 40 energy producers in the S&P 500 and helped the Dow Jones Industrial Average rebound from a 317-point drop. CB Richard Ellis, the world's largest provider of commercial real-estate services, surged 43 percent for its steepest advance since going public in 2004.

Declines in midday trading today pushed the S&P 500 to 35 percent below its average for the past 200 days, only the second time that's happened since the Great Depression. The last time was a day before the index rose 12 percent on Oct. 13, the biggest rally since 1939.

``Bottom line, stocks are incredibly cheap,'' said Wayne Wilbanks, chief investment officer of Wilbanks Smith & Thomas Asset Management in Norfolk, Virginia, which oversees $1.1 billion. ``Volatility accelerates when markets reach bottoms. We could be at 10,000 in a day and a half the way the market is right now.''

The S&P 500 added 6.9 percent to 911.29, reversing a slide of 3.9 percent. The Dow increased 552.59 points, or 6.7 percent, to 8,835.25. The Nasdaq Composite Index jumped 6.5 percent to 1,596.7. More than 14 stocks rose for each that fell on the New York Stock Exchange, where almost 2 billion shares changed hands in the busiest trading session since Oct. 16.

Bounce Off Low

The S&P 500 swung between gains and losses at least 38 times, including a drop that sent the benchmark index to its lowest level since the Iraq War broke out 5 ½ years ago.

Europe's benchmark index fell 0.6 percent, led by banks and commodity producers, as Germany sank into recession and the OECD forecast a global economic slump. Asia's regional benchmark slid 4.8 percent after Commonwealth Bank of Australia said bad debts may double and China's industrial output missed estimates.

The MSCI Emerging Markets Index lost 1.8 percent, extending its three-day slide to more than 10 percent.

Exxon Mobil, the largest oil company, climbed 9.4 percent to $75.41 and contributed most to the S&P 500's advance. Chevron, the second-biggest U.S. energy company, added 13 percent to $75.71 for the biggest gain in the Dow average. Energy shares in the S&P 500 gained 11 percent for the biggest advance among its 10 main industry groups, all of which climbed more than 4.4 percent.

Energy Valuations

The gains in oil producers came after the valuation of the S&P 500 Energy Index retreated to less than 6.2 times earnings for the group, the cheapest since Bloomberg began tracking the data in 1995.

Oil climbed 3.7 percent to $58.24 a barrel after a U.S. government report showed a smaller-than-expected supply increase and refiners cut operating rates.

CB Richard Ellis, which closed at a four-year low of $3.77 yesterday and sold 50 million shares at that price after the close, rose $1.62 to $5.39. It may use the proceeds to repay debt, make acquisitions, add to working capital or for capital expenditures and investments, it said in a regulatory filing.

General Electric Co. climbed 57 cents to $16.86 after falling to the lowest level in 12 years. Chief Executive Officer Jeffrey Immelt and Vice Chairman Michael Neal each bought 50,000 shares, according to government filings. The company also said it has no plans to cut its dividend.

Prologis Climbs

Prologis, which slid 35 percent yesterday, jumped 53 percent to $6.84 today, the biggest gain in the S&P 500. Shares of the world's largest warehouse developer look ``especially attractive'' and the company's announcement yesterday to replace its chief executive officer and cut dividends is ``prudent,'' Barclays Plc wrote in a report.

Real estate companies in the S&P 500, which slid 32 percent in October, rose nearly 12 percent today, the biggest advance among 24 industry groups.

Genworth Financial Inc. surged 53 percent to $1.53 after falling to a record low of $1 yesterday. The insurer ousted from a government program that buys short-term debt from financial firms borrowed $930 million from its revolving credit lines and will use the money to repay debt in 2009. Genworth said it has no more long-term debt maturing until 2011.

CIT Group Inc. added 26 percent to $4.24. The largest independent U.S. commercial lender applied to become a bank holding company and requested capital from the U.S. Treasury after six straight quarterly losses drained capital.

`Overblown'

Sprint Nextel Corp. rose 15 percent to $2.24. Speculation that the third-largest U.S. mobile phone company may go bankrupt is ``overblown,'' Oppenheimer & Co. analyst Timothy Horan wrote in a report. The stock fell 53 percent in the previous six sessions.

This week's three declines in the S&P 500 before today wiped out almost all of the index's rebound from a five-year closing low on Oct. 27.

Today's intraday low for the S&P 500 was the lowest since March 2003. The previous intraday low this year, 839.80 on Oct. 10, followed a surge in money-market interest rates triggered by the Sept. 15 bankruptcy filing of Lehman Brothers Holdings Inc., once the fourth-largest U.S. securities firm.

Money-market rates have since retreated to below where they were in mid-September, aided by injections of federal money into banks and other financial companies and cuts in the U.S. benchmark rate set by the Federal Reserve.

Consumer Credit

Consumers' access to credit in the form of car loans, student loans and credit cards remains impaired, ``creating a heavy burden on the American people and reducing the number of jobs in our economy,'' Treasury Secretary Henry Paulson said yesterday.

Early losses in stocks today came after the Labor Department's weekly tally of new claims for unemployment insurance benefits climbed by 32,000 to a larger-than-forecast 516,000. The total number of people on benefit rolls jumped to the highest level since 1983.

About $29 trillion has been erased from the value of global equities this year and the S&P 500 is down 44 percent as credit losses and writedowns neared $950 billion at global banks and insurers. The Organization for Economic Cooperation and Development today cut its 2009 global forecast for the second time this year and urged governments to take more measures to fight a recession.

Dell Drops

Dell Inc. lost 23 cents to $10.27. Goldman lowered its share-price forecast to $9 from $14. Dell ``remains highly dependent on transactional hardware sales and pricing, both of which are likely to suffer as demand falls,'' analysts including David C. Bailey wrote in a research note dated Nov. 12.

Dr. Pepper Snapple Group Inc. fell 13 percent to $18.19 for the biggest drop in the S&P 500. The beverage maker spun off by Cadbury Plc this year posted third-quarter profit that fell more than analysts estimated and cut its 2008 earnings forecast, citing the faltering U.S. economy.

General Motors Corp. lost 4.2 percent to $2.95. The largest U.S. automaker may need as much as $30 billion in U.S. aid through 2010, and its stock price may keep sliding after tumbling almost 90 percent this year, analysts and an investor said. Goldman Sachs dropped its coverage of the shares, saying it's ``highly uncertain'' Congress will pass a bailout package this year.

Crocs Inc. slumped 45 percent to $1.05. The maker of perforated plastic clogs predicted a wider loss than analysts estimated and forecast revenue that also trailed expectations.

Stocks tumbled yesterday as the U.S. Treasury's plan to use bailout funds to shore up consumer lending and Best Buy Co.'s warning of a ``seismic'' slowdown in spending stoked concern the credit crisis is far from over.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.