By Rita Nazareth - Sep 17, 2011 3:44 AM GMT+0700
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Trader George Ettinger works on the floor of the New York Stock Exchange on Sept. 16, 2011. Photographer: Richard Drew/AP
Sept. 16 (Bloomberg) -- Bloomberg's Cali Carlin reports on the performance of the U.S. equity market today. U.S. stocks advanced for a fifth straight day, the longest rally since July for the Standard & Poor’s 500 Index, amid optimism that European leaders will make further progress on controlling the region’s debt crisis. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
Sept. 16 (Bloomberg) -- Michael Vogelzang, chief investment officer at Boston Advisors LLC, talks about the U.S. stock market's performance and outlook. Vogelzang also discusses Europe's sovereign debt crisis, emerging-market stocks and his investment strategy. He speaks with Lisa Murphy, Adam Johnson and Sheila Dharmarajan on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Sept. 16 (Bloomberg) -- Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC, discusses the European debt crisis and investment strategy. He speaks with Scarlet Fu on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)
Traders work at the New York Stock Exchange in New York. Photographer: Scott Eells/Bloomberg
U.S. stocks advanced for a fifth straight day, the longest rally since July for the Standard & Poor’s 500 Index, amid optimism that European leaders will make further progress on controlling the region’s debt crisis.
Amazon.com Inc. (AMZN) jumped 5.5 percent to a record, while Procter & Gamble Co. (PG) gained 2.5 percent as a report showed that confidence among U.S. consumers rose. Textron Inc. (TXT), Tyco International Ltd. (TYC) and Rockwell Collins Inc. (COL) added more than 3.1 percent after a report that United Technologies Corp. is lining up financing for an acquisition. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) slumped at least 1.1 percent.
The S&P 500 rose 0.6 percent to 1,216.01 at 4 p.m. New York time. The index gained 5.4 percent since Sept. 9, its third- biggest weekly rally since 2009. The Dow Jones Industrial Average added 75.91 points, or 0.7 percent, to 11,509.09. The rally trimmed the gauge’s drop this year to 0.6 percent.
“The stock market is extremely undervalued,” David Goerz, the San Francisco-based chief investment officer at Highmark Capital Management Inc., which oversees $17.2 billion, said in a telephone interview. “As things begin to improve, the market can rise back to a more normal valuation. The fact that we got some moderation in terms of thinking about the ECB and how it’s going to address the crisis helped reduce some of the risk. In addition, the most recent data points suggest that this pause in economic activity is in fact transitory.”
The S&P 500 lost 18 percent between April 29 and Aug. 8 amid concern that Europe’s crisis threatened the global economy. The decline left the index trading at 12.2 times earnings last month, the cheapest since 2009, according to data compiled by Bloomberg. Since then, the index rose 8.6 percent.
Most-Indebted
Equities rose yesterday as the European Central Bank and international policy makers coordinated to lend dollars to banks to tame the credit crisis. Earlier this week, French and German leaders confirmed they will support Greece’s continued participation in the shared euro currency. Ministers began meeting today in Wroclaw, Poland, to discuss ways of shoring up Europe’s most-indebted nations, with U.S. Treasury Secretary Timothy Geithner also in attendance.
European finance ministers ruled out efforts to prop up the faltering economy and gave no indication of providing aid for lenders to go along with yesterday’s liquidity lifeline from the ECB. Clashing with Geithner, finance chiefs from the euro region said the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation.
‘Hostage’
“We’re hostage to the European crisis,” Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC, said in a telephone interview. The firm manages $3.4 billion. “The fear is that there will be another systemic move that will put us into a recession. Sentiment has gotten too negative. There’s a case to be made that any pullback is going to be a buying opportunity.”
Household product and retail companies had the two biggest gains in the S&P 500 within 24 industries, rallying at least 1.7 percent. Amazon, the world’s largest online retailer, jumped 5.5 percent to $239.30, the highest level since it went public in 1997. Procter & Gamble, the world’s largest consumer-products company, climbed 2.5 percent, the most in the Dow, to $64.33.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 57.8 this month from 55.7 in August. The median estimate of economists surveyed by Bloomberg News called for a reading of 57. The group’s measure of consumer expectations six months from now dropped to the lowest level since May 1980.
Seeking Financing
United Technologies, the maker of Sikorsky helicopters and Carrier air conditioners, is seeking financing that may exceed $20 billion for a major U.S. acquisition, a person familiar with the matter said. The person wasn’t authorized to speak publicly because the details are confidential. John Moran, a spokesman for United Technologies, declined to comment.
Reuters reported the financing search earlier today, citing people it didn’t identify. The story said Goodrich Corp. and Rockwell Collins were attractive targets, according to people not directly involved in the matter, and said Textron and Tyco International were among companies mentioned in the past. Rockwell climbed 7.8 percent, the most in the S&P 500, to $56.21. Textron increased 6.8 percent to $18.63, while Tyco rose 3.1 percent to $43.70.
Banks had the biggest decline in the S&P 500 within 24 industries, falling 0.4 percent as a group. Bank of America, the biggest U.S. lender by assets, retreated 1.4 percent to $7.23. JPMorgan retreated 1.1 percent to $33.43.
Losing Ground
Research In Motion Ltd. (RIM) tumbled 19 percent to $23.93 after missing analyst estimates as sales of BlackBerry smartphone models slowed and the company shipped fewer PlayBook tablet computers than projected. The company is losing ground in that market to Apple Inc.’s iPhone and devices that use Google Inc.’s Android software. It has made little progress with its PlayBook in the tablet computer market, shipping just one device for every 46 iPads that Apple sold in the latest quarter.
“RIM is on a path to becoming a niche player,” said Ted Schadler, an analyst for Forrester Research Inc. “RIM has to essentially retrench its strategy. It has to focus on what about its products make them different or better than Apple or Google products.”
A gauge of energy shares in the S&P 500 dropped 0.1 percent, the only decline among 10 industries, as crude oil slumped the most in a week. Schlumberger Ltd. (SLB), the world’s largest oilfield-services provider, fell 1.9 percent to $72.84.
Today was the expiration for U.S. futures and options contracts on indexes and individual stocks. So-called quadruple witching occurs once every three months.
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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