By Nikolaj Gammeltoft - Sep 30, 2011 3:58 AM GMT+0700
U.S. stocks rose, rebounding from a 1 percent decline in the Standard & Poor’s 500 Index, as lower- than-estimated claims for unemployment benefits and helped offset losses by consumer and technology shares.
Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) climbed at least 3 percent as European lenders soared after German lawmakers backed an enhanced euro-region rescue fund. General Electric Co. (GE) gained 2.7 percent, while Hewlett-Packard Co. (HPQ) added 2.5 percent as jobless claims fell more than forecast and the U.S. economy’s second-quarter expansion topped projections. Advanced Micro Devices Inc. (AMD) slid 14 percent after the chipmaker cut its forecast.
The S&P 500 added 0.8 percent to 1,160.40 at 4 p.m. New York time after rallying as much as 2.2 percent. The Dow Jones Industrial Average added 143.08 points, or 1.3 percent, to 11,153.98. The Nasdaq Composite Index fell 0.4 percent as Apple Inc. (AAPL) declined 1.6 percent, dropping for a fourth straight day.
“We got two excellent numbers,” Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., said about the economic reports in a phone interview. His firm oversees about $350 billion. “It suggests that we are coming out of the soft patch and not spiraling into a double-dip recession.”
Two industries that have beaten the S&P 500 in the third quarter, computer and software makers as well as companies reliant on discretionary consumer spending, fell the most today. The S&P 500 Information Technology Index lost 0.4 percent, bringing its two-day drop to 1.8 percent. Among its constituents, Apple, which rose 16 percent in the quarter, has dropped 5.5 percent since Sept. 20, while Google Inc., up 4.2 percent for the quarter, slid 2.2 percent in the last two days.
Tiffany, Netflix
Among consumer stocks, Tiffany & Co. (TIF) declined 6.9 percent today. Wynn Resorts Ltd. (WYNN) fell 7.3 percent, and Netflix Inc. (NFLX) tumbled 11 percent. Netflix, the movie rental service that has rallied 194 percent since March 9, 2009, plunged 57 percent in the third quarter, the second-biggest retreat in the S&P 500 behind Alpha Natural Resources Inc., which decreased 59 percent.
“They’re shooting the last bastions of outperformance, because consumer stocks have actually done really well,” said Dan Veru, who oversees $3.3 billion as chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC. “They’re selling the winners that have exposure outside of the U.S.”
Stocks worldwide are headed for their worst quarterly performance since the end of 2008 on concern Europe’s debt crisis will trigger a global recession. The MSCI All-Country World Index has lost 16 percent this quarter and trades at 11.9 times reported earnings, near the lowest level since March 2009. The S&P 500 has lost 12 percent since the end of June.
Extending Gains
Stock futures extended gains today as applications for jobless benefits dropped by 37,000 in the week ended Sept. 24 to 391,000, the fewest since April, Labor Department figures showed. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. An agency official said the data probably reflected a “slight mistiming” in the seasonal factors used to modify the figures.
A separate report showed the U.S. economy grew at a 1.3 percent pace in the second quarter, faster than estimated last month and helped by exports and spending on services.
“The U.S. economic data was better than expected,” Michael Gibbs, Memphis, Tennessee-based chief equity strategist at Morgan Keegan Inc., said in a telephone interview. His firm oversees about $70 billion in client assets. “The market wants Europe to show us, not tell us, what’s going to happen.”
German Vote
Global equities climbed earlier as Germany’s lower house of parliament approved the expansion of the European bailout fund. The bill’s passage by Europe’s biggest economy allows euro-area officials to weigh further measures to bolster Greece and stem investor concern that helped end the biggest three-day rally in 16 months for European stocks.
“Our markets have fairly well priced in all but the most draconian of scenarios,” Wilbur Ross, the billionaire chairman of private-equity firm WL Ross & Co., said today in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “Unless something really calamitous happens” such as a default of a larger European country like Spain or Italy, “short of that, I think we’ve pretty well priced things in.”
The Morgan Stanley Cyclical Index of companies most-tied to the economy climbed 1.5 percent. The Dow Jones Transportation Average, also a proxy for the economy, added 2.1 percent. General Electric gained 2.7 percent to $15.86, and Hewlett- Packard advanced 2.5 percent to $23.78.
BofA, JPMorgan
Financial stocks in the S&P 500 rallied 2.8 percent, the most among 10 industries. Bank of America climbed 3.1 percent to $6.35, while JPMorgan added 3 percent to $31.39.
Harleysville Group Inc. (HGIC) surged 87 percent to $58.96. The insurer agreed to be acquired by Nationwide Mutual Insurance Co., the eighth-largest U.S. personal auto insurer, for $60 a share in cash.
Advanced Micro Devices sank 14 percent, the most in the S&P 500, to $5.31. The second-largest maker of processors for personal computers reduced its forecasts for third-quarter sales and profitability, citing manufacturing glitches.
Netflix dropped 11 percent to $113.19 for the second- biggest loss in the S&P 500. The online and mail-order video service fell on concern about competition with Amazon.com Inc. and Microsoft Corp. The streaming business faces competition from Amazon, which unveiled a tablet computer yesterday that’s designed to work with its own video service. Microsoft plans to offer online pay television service from Comcast Corp. and Verizon Communications Inc. (VZ) through its Xbox Live service, people with knowledge of the situation said.
To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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