By Inyoung Hwang - Dec 9, 2011 10:16 PM GMT+0700
U.S. stocks rose, pushing the Standard & Poor’s 500 Index (SPX) toward its second straight weekly gain, after European leaders agreed to boost a rescue fund and tighten budget rules to stem the region’s debt crisis.
JPMorgan Chase (JPM) & Co. and Bank of America Corp. (BAC) climbed more than 2.7 percent as financial companies rallied amid optimism on Europe. Caterpillar Inc. (CAT), the world’s largest construction and mining-equipment maker, and Halliburton Co. (HAL) gained at least 1.8 percent as investors bought shares of companies most tied to economic growth. Pall Corp. surged 10 percent after reporting first-quarter profit that topped analysts’ estimates.
The S&P 500 rallied 1.2 percent to 1,249.05 at 10:12 a.m. New York time. The index has risen 0.4 percent this week even after sliding 2.1 percent yesterday as the European Central Bank damped speculation it would boost purchases of government bonds. The Dow Jones Industrial Average added 138.65 points, or 1.2 percent, to 12,136.35 today.
“We’re starting to see some sort of framework for fiscal integration,” said Jeffrey Schwarte, a money manager who helps oversee about $231 billion in Des Moines, Iowa at Principal Global Investors, in a telephone interview. “Things are incrementally getting resolved in Europe. Not out of the woods but at least we have some sort of framework. The key thing is can we regain confidence and credibility in the markets?”
European leaders meeting in Brussels tightened anti-deficit rules and agreed to boost their crisis-fighting war chest by as much as 200 billion euros ($267 billion) by funneling money to the International Monetary Fund.
‘Very Good Outcome’
In an accord hailed as a “very good outcome” by ECB President Mario Draghi, the leaders outlined a “fiscal compact” to prevent future debt run-ups and accelerated the start of a planned 500 billion-euro rescue fund. In addition, they watered down the demand that investors share the cost of future bailouts.
Leaders aim to set up the permanent rescue fund, known as the European Stability Mechanism, in July 2012, a year ahead of schedule. By March, they will reassess plans to cap the overall lending of the ESM and the temporary fund at 500 billion euros. Stock futures pared gains after Chancellor Angela Merkel said Germany opposes adding to the fund’s firepower.
U.S. stocks extended gains as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment for December rose to 67.7 from a final November reading of 64.1. The gauge was projected to rise to 65.8, according to the median forecast of 73 economists surveyed by Bloomberg News. The trade deficit narrowed in October to the lowest level of the year, reflecting a drop in imports that will help give the U.S. economy a lift, Commerce Department figures showed.
Banks Rally
Morgan Stanley (MS) led gains in financial companies, which had the biggest advance out of 10 sectors in the S&P 500, rising 2 percent as a group. New York-based Morgan Stanley increased 5.7 percent to $16.78. JPMorgan Chase climbed 2.7 percent to $33.10. Bank of America added 2.8 percent to $5.75.
Investors bought shares of cyclical companies, sending Caterpillar up 1.8 percent to $94.55. Halliburton, the Houston- based energy services provider, rose 2.5 percent to $33.97. Energy companies had the second-biggest increase out of groups in the S&P 500 (SPXL1), advancing 1.7 percent, while industrial stocks climbed 1.3 percent.
DuPont Co. slid 4.2 percent to $44.56. The chemical maker lowered its forecast for 2011 to no more than $3.95 a share from as much as $4.05, missing the average analyst estimate of $4.04. The Wilmington, Delaware-based company cited slower growth in certain segments.
Pall surged 10 percent, the biggest increase in the S&P 500, to $57.91. The supplier of filters (PLL) for drugmakers and refineries reported first-quarter earnings were 74 cents a share, exceeding the average analyst estimate of 65 cents.
Cooper Companies Inc. jumped 15 percent to $67. The maker of contact lenses forecast fiscal year 2012 earnings of at least $4.80 a share, above the average analyst estimate of $4.65 in a Bloomberg survey.
To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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