By Rita Nazareth - Nov 29, 2011 10:19 PM GMT+0700
Nov. 29 (Bloomberg) -- David Gaud, a Hong Kong-based senior portfolio manager of Edmond de Rothschild Asset Management, talks about Asian stocks and investment strategy. Gaud also discusses Europe's sovereign debt crisis. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
U.S. stocks rose, after the biggest gain in a month for the Standard & Poor’s 500 Index, as the biggest increase since 2003 in a gauge of American consumer confidence bolstered optimism in the world’s largest economy.
Yahoo! Inc. climbed 2.3 percent as two people with knowledge of the matter said private-equity firm Thomas H. Lee Partners is considering a bid. Hewlett-Packard Co. gained 2.5 percent after RBC Capital Markets raised its recommendation for the computer maker. Tiffany & Co. slumped 8.8 percent after the world’s second-largest luxury jewelry retailer cited “weaknesses” in sales in Europe and the eastern U.S.
The S&P 500 advanced 0.8 percent to 1,201.67 at 10:17 a.m. New York time, after the benchmark gauge gained 2.9 percent yesterday. The Dow Jones Industrial Average increased 95.86 points, or 0.8 percent, to 11,618.87 today.
“The economic reports have shown that the U.S. has been insulated from all the noise coming out of Europe,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $550 billion. “Consumers are not really bothered by that, at least not yet. We expect the data to be good. It’s going to be fits and starts, but they continue to move along the right direction in Europe.”
The S&P 500 yesterday snapped a seven-day decline amid speculation European leaders will boost efforts to end the debt crisis. The benchmark gauge for American equities was still down 4.9 percent in November through yesterday as a measure of financial shares tumbled 10 percent.
Biggest Since 2003
The Conference Board’s index increased to 56 from a revised 40.9 reading in October, the biggest monthly gain since April 2003, figures from the New York-based private research group showed today. The gauge, at a four-month high, exceeded the most-optimistic forecast in a Bloomberg News survey of economists.
Demand for Italy’s 2014 bonds was 1.5 times the amount on offer, up from 1.35 times at the previous auction. Finance ministers are meeting to thrash out details on how to boost the European Financial Stability Facility.
Yahoo gained 2.3 percent to $15.70. Thomas H. Lee Partners joins a growing list of companies that are sizing up offers for Yahoo. Private-equity firm Silver Lake is working with Microsoft Corp. to bid for a minority stake in Yahoo, two other people familiar with the matter said. Andreessen Horowitz, a venture- capital firm, may join the Silver Lake-led group, another person said.
Hewlett-Packard added 2.5 percent to $27.19. The company was raised to “outperform” from “sector perform” at RBC Capital Markets. The 12-month share-price estimate is $32.
Thailand Floods
Seagate Technology Plc jumped 6.1 percent to $16.96. The company forecast higher sales than analysts had estimated, saying it withstood flooding in Thailand better than much of the disk-drive industry.
Research In Motion Ltd. rose 6.4 percent to $17.54. The BlackBerry maker was raised to “market perform” from “underperform” at Stanford C. Bernstein & Co., which said shareholder activism may lead to management change or a takeover.
Tiffany dropped 8.8 percent to $67.14. The company reiterated its forecast for an annual sales gain in the “high- teens” in percentage terms, after reporting a 21 percent jump in third-quarter revenue, according to a statement today. Tiffany also said a key measure of profitability shrank because it sold more higher-priced jewelry that yields a lower gross margin.
AMR Corp.
American Airlines parent AMR Corp. filed for bankruptcy after failing to secure cost-cutting labor agreements and sitting out a round of mergers that dropped it from the world’s largest airline to No. 3 in the U.S.
With the filing, American became the final large U.S. full- fare airline to seek court protection from creditors. The Fort Worth, Texas-based company, which traces its roots to 1920s air- mail operations in the Midwest, listed $24.7 billion in assets and $29.6 billion in debt in Chapter 11 papers filed today in U.S. Bankruptcy Court in Manhattan. Chairman Gerard Arpey will retire and be replaced by Thomas Horton, AMR said.
Facebook Inc. is considering raising about $10 billion in an initial public offering that would value the world’s largest social-networking site at more than $100 billion, a person with knowledge of the matter said. The company may file for the IPO before the end of the year, said the person, who asked not to be identified because the deliberations are private.
The S&P 500 will probably be stuck in a 250-point range next year as Europe’s debt crisis offsets optimism about U.S. earnings, according to JPMorgan Chase & Co.
‘Inside-Range Year’
The benchmark index for U.S. equities will most likely fluctuate between 1,100 and 1,350, forming an “inside-range year” by staying roughly within the band seen this year, said Michael Krauss, JPMorgan’s New York-based head of technical research. He sees a 12 percent chance of an economic recession that would push the S&P 500 as low as 800. The odds of the index rising to 1,500 because of progress on the crisis or stimulus from central banks are 8 percent, Krauss said.
“The markets now are like ships caught in the treacherously stormy seas of headline risk,” Krauss wrote in a note to clients yesterday. “It will be difficult for equities to sustain back above the 1,300-1,350 trendlines, as long as the European sovereign debt crisis and recession lurks in the background. Similarly, it will be tough to move below strong 1,075-1,100 clustered support, as long as the U.S. avoids an economic recession, earnings stay elevated, and investors remain defensively positioned.”
To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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