By Rita Nazareth - Jan 19, 2012 10:27 PM GMT+0700
Jan. 19 (Bloomberg) -- Bob Janjuah, global head of tactical asset allocation at Nomura International Plc, talks about the outlook for the U.S. economy and equity markets. He speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s Index higher for a third day, as Bank of America Corp. (BAC) rallied after swinging to a profit and jobless claims plunged to the lowest level since 2008.
Equities briefly erased gains after a Federal Reserve gauge of manufacturing in the Philadelphia area trailed economists’ estimates. Bank of America, the second-largest U.S. lender, added 5.3 percent as the company sold assets and built capital faster than expected. Morgan Stanley climbed 5.4 percent after the owner of the world’s largest brokerage reported a smaller- than-estimated loss. EBay Inc. (EBAY) jumped 3.9 percent as sales and profit beat analysts’ estimates.
The S&P 500 added 0.2 percent to 1,311.22 at 10:23 a.m. New York time. The benchmark gauge for American equities rallied 1.7 percent in three days. The Dow Jones Industrial Average gained 13.17 points, or 0.1 percent, to 12,592.12 today.
“We’re in a fragile economy, we’re not going to have robust growth, but it’s going to take us a lot of things to derail,” Richard Weeks, the Vienna, Virginia-based managing director and partner at HighTower’s VWG Wealth Management. His firm oversees about $20 billion. “I don’t know that I would think that the earnings of Bank of America, Morgan Stanley (MS) are all so fabulous, but everyone is so relieved that they are not as bad as they feared. It’s not like these banks are going to melt down into the sea.”
Stocks rose as as Labor Department figures showed that jobless claims plunged by 50,000 to 352,000 in the week ended Jan. 14. The median forecast of 41 economists in a Bloomberg News survey projected 384,000. The Federal Reserve Bank of Philadelphia’s general economic index increased to 7.3 in January from 6.8 last month. Economists surveyed by Bloomberg News forecast the gauge would rise to 10.3, according to the median of 56 estimates.
Most Since 1987
The S&P 500 has gained 4 percent in 2012 through yesterday, the most since it rose 10 percent over the first 11 days in 1987, according to data compiled by Bloomberg. During that period, the index advanced seven of the first eight days, something that has occurred eight times since 1900, data compiled by JPMorgan Chase & Co. show. The mean return those years was 16 percent, the data show.
Combined S&P 500 profit is forecast to reach $104.76 a share in 2012, the highest level ever, according to data compiled by Bloomberg. About $640 billion has been added to the value of American shares this year and the S&P 500 reached an almost six-month high yesterday, as economic reports outweighed concern that downgrades for European nations would worsen the debt crisis.
‘Conservative’
“We do believe that the fourth quarter will be another positive surprise in terms of actual earnings by the time we reach the finish line,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, wrote in a note to clients. His firm manages about $107 billion. “Analyst estimates have declined since October. Estimates could prove conservative, if analysts were a bit too bearish because market sentiment turned sharply due to the concerns about Europe.”
Financial shares have rallied 7.2 percent this year through yesterday after tumbling 18 percent in 2011. The group is poised to extend gains today after results at some of the biggest companies.
Bank of America rallied 5.3 percent to $7.16. Chief Executive Officer Brian T. Moynihan is cutting assets, expenses and staff while raising capital to meet demands from regulators for a larger cushion against unexpected losses. So far, $50 billion in holdings are gone, and Moynihan’s Project New BAC will eliminate at least 30,000 jobs as the firm seeks to save $5 billion annually. He’s also aiming to quell disputes over faulty mortgages that have cost the bank about $40 billion.
Trading Revenue
Morgan Stanley climbed 5.4 percent to $18.29. Morgan Stanley posted the only increase in trading revenue excluding accounting gains among the five largest Wall Street banks in 2011, making progress toward Chairman and Chief Executive Officer James Gorman’s goal of boosting market share.
EBay, the largest Internet marketplace, jumped 3.9 percent to $31.51. Chief Executive Officer John Donahoe boosted marketing spending 25 percent last year and upgraded EBay’s technology to lure back users who defected to rivals such as Amazon.com Inc.
Johnson Controls Inc. (JCI) dropped 8 percent to $32.75. The largest U.S. auto supplier lowered its forecast for profit for the fiscal year because of weakening demand in Europe.
BlackRock Inc. (BLK) fell 1.8 percent to $184.44. The world’s biggest asset manager said fourth-quarter profit fell 16 percent as slumping markets worldwide led to a decline in fees. BlackRock said it cut its workforce by 3.4 percent during the quarter, when market volatility hurt performance fees.
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
Posts
No comments:
Post a Comment