By Whitney Kisling - Dec 16, 2011 10:05 PM GMT+0700
U.S. stocks rose, paring a weekly decline for the Standard & Poor’s 500 Index (SPX), amid optimism the European Union will meet a Dec. 19 deadline for funding a crisis-fighting package.
Alcoa Inc. and Freeport-McMoRan Copper & Gold Inc. (FCX) climbed at least 1 percent after base metals advanced. Citigroup Inc. (C) and Bank of America Corp. (BAC) each added 1.8 percent, leading a rally in financial shares. Research In Motion Ltd. (RIM) dropped 11 percent as the company delayed the release of a new generation of BlackBerry devices.
The S&P 500 rose 1.1 percent to 1,228.67 at 10:03 a.m. New York time. The benchmark index rose 0.3 percent yesterday after slipping 3.5 percent during the previous three days. The Dow Jones Industrial Average added 77.92 points, or 0.7 percent, to 11,946.73 today.
“Things got so oversold with three downer days,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview. His firm manages $300 billion. “There are lots of reasons to be bearish, only the U.S. data has been somewhat upbeat. It’s just equities pretty much across the board are pretty cheap.”
The S&P 500 is down 2.2 percent this week after posting its first back-to-back weekly gain since October. The index slumped on Dec. 13 after the Federal Reserve refrained from taking new actions to bolster growth. The central bank said the U.S. economy is maintaining its expansion even as the global economy slows. U.S. stocks rose yesterday after reports on jobless claims and manufacturing boosted confidence in the world’s largest economy.
Options Expirations
Today is the expiration of futures and options contracts on indexes and individual stocks, an event known as quadruple witching, which occurs once every three months.
The S&P 500 is trading for 12.8 times reported earnings, 22 percent lower than the six-decade average of 16.4, according to data compiled by Bloomberg. American companies have topped Wall Street profit estimates for 11 straight quarters.
Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said the European Union should meet an informal Dec. 19 deadline for arranging loans to the International Monetary Fund as part of a crisis-fighting package. Germany’s Bundesbank said it sees “no urgent need” to reach a decision.
S&P said today the Netherlands, Germany, Belgium, Austria and Finland may suffer larger contractions of their gross domestic product next year, adding to concerns about the global economy.
Standing By
Fed Bank of New York President William C. Dudley in prepared testimony reiterated the central bank isn’t planning to undertake additional steps to curtail the impact of Europe’s debt crisis, while standing by to boost liquidity if necessary.
U.S. stocks maintained gains earlier after a report showed the cost of living stagnated in November, supporting the Fed’s view that inflation remains in check. The unchanged reading in the consumer-price index followed a 0.1 percent decline the prior month, the Labor Department said. Core prices, which exclude food and energy costs, rose 0.2 percent, more than forecast, reflecting higher medical care and clothing costs.
Alcoa (AA), the largest U.S. aluminum producer, advanced 1 percent to $8.87. Freeport-McMoRan, the biggest publicly traded copper producer, gained 1.3 percent to $37.33.
Copper led base metals higher on the London Metal Exchange as yesterday’s economic data continued to ease concerns that the global economic recovery is at risk. Energy and material shares have lost the most of the 10 S&P 500 industries (SPXL1) so far in December, falling at least 4.5 percent, according to data compiled by Bloomberg.
‘Powerful Impetus’
“Yesterday’s economic data already have a hint that fortunes could turn more positive for industrial metals in 2012,” Tobias Merath, head of global commodity research at Credit Suisse AG, wrote in a report today. “When economic growth stabilizes, this could deliver a powerful impetus.”
S&P 500 financial companies climbed 1.3 percent after erasing a rally yesterday. Citigroup rose 1.8 percent to $26.37, while Bank of America added 1.8 percent to $5.36.
RIM (RIMM) dropped 11 percent to $13.46 after saying a new generation of BlackBerrys designed to fuel a comeback won’t be out until the “latter part” of 2012. The smartphone maker, which originally planned to release the new devices in the first quarter of next year, also gave sales and profit forecasts that missed analysts’ estimates.
Cablevision Systems Corp. (CVC) tumbled 14 percent to $12.01. The U.S. cable-television provider’s chief operating officer, Tom Rutledge, will step down this month for undisclosed reasons, in what Craig Moffett, an analyst at Sanford C. Bernstein & Co., calls a “staggering loss” for the company.
Zynga Inc., the largest maker of games for Facebook Inc.’s website, raised $1 billion in its initial public offering, pricing the shares at the top of the marketed range.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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