U.S. Stocks Advance as Employment Growth Tops Forecasts

By Rita Nazareth - Mar 9, 2012 9:42 PM GMT+0700

U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third straight day, after government data showing the economy added more jobs than forecast last month bolstered optimism in the economy.

Citigroup Inc. (C) and Anadarko Petroleum (APC) Corp. added at least 0.7 percent to pace gains among the biggest companies. Starbucks (SBUX) Corp., the world’s biggest coffee-shop operator, rallied 2.2 percent on plans to introduce a new single-cup brewer. Green Mountain Coffee Roasters Inc. (GMCR) tumbled 15 percent. Texas Instruments (TXN) Inc., the largest maker of analog semiconductors, fell 1.5 percent after cutting sales and profit forecasts.

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Traders work at the New York Stock Exchange (NYSE) in New York. Photographer: Scott Eells/Bloomberg

The S&P 500 added 0.2 percent to 1,369.08 at 9:40 a.m. New York time. The benchmark gauge for American equities increased 1.9 percent in three days. The Dow Jones Industrial Average gained 20.29 points, or 0.2 percent, to 12,928.23 today.

“We can sit back because the U.S. is not going into a recession even though Europe is in a recession,” Stephen Wood, the New York-based chief market strategist for Russell Investments, said in a telephone interview. His firm oversees $137.6 billion. “These jobs numbers are not fantastic, but they are consistent with that slow, non-recessionary economic growth forecast.”

The 227,000 increase in payrolls followed a revised 284,000 gain in January that was bigger than first estimated, Labor Department figures showed today in Washington. The median projection of economists in a Bloomberg News survey called for a 210,000 rise in February employment. The jobless rate held at 8.3 percent.

Rescue Package

Investors also watched developments in Europe’s attempts to tame its debt crisis. Greece pushed through the biggest sovereign restructuring in history after cajoling private investors to forgive more than 100 billion euros ($132 billion) of debt, opening the way for a second rescue package.

“The jobs report was solid, but not spectacular,” James McDonald, chief investment strategist at Northern Trust Corp. in Chicago, said in a telephone interview. His firm manages $663 billion. “This helps depict the U.S. as the standout Western economy and continuing to slowly, but steadily repair. In Greece, they are going to force the debt exchange through the collective action clauses. This is a positive. The path of least resistance for the S&P 500 this year is up.”

Today is the third anniversary of the 2009 bear-market low for the S&P 500. The benchmark gauge has risen 102 percent since closing at 676.53 on March 9, 2009, on speculation the economy would recover from the worst contraction since the Great Depression. The index is up 8.9 percent in 2012.

Largest Companies

Some of the largest companies gained today. Citigroup advanced 0.7 percent to $34.25. Anadarko Petroleum increased 3.5 percent to $86.55.

Starbucks rallied 2.2 percent to $51.46. The Verismo machine will make espresso-based beverages and brewed coffee. Starbucks said it will advertise and sell the machine and single-cup pods through a “strategic relationship” with closely held Krueger GmbH. Green Mountain tumbled 15 percent to $53.16.

Molycorp Inc. (MCP) rose 8.2 percent to $28.10. After losing two- thirds of its value in 10 months as demand for rare-earth metals imploded, it’s now seeking to boost shareholder returns with its biggest takeover. The owner of the largest rare-earth deposit outside China yesterday agreed to buy Neo Material (NEM) Technologies Inc. for C$1.3 billion ($1.3 billion) in cash and stock.

With Neo Material, Molycorp will gain the ability to produce more types of magnets and increase sales to China, boosting profitability, Byron Capital Markets Ltd. said.

‘Stronger Story’

“It actually makes it a stronger story,” Jonathan Hykawy, a Toronto-based analyst at Byron Capital, said in a telephone interview. “Molycorp effectively has the pieces of the puzzle if this acquisition goes through to basically do the entire magnet industry. That’s a big, big, added slice of added cash flow that Molycorp really isn’t paying all that much for.”

Smith & Wesson Holding Corp. (SWHC) increased 12 percent to $6.36. The handgun manufacturer reported third-quarter earnings excluding some items of 8 cents a share, beating the average analyst estimate of 4 cents.

Texas Instruments lost 1.5 percent to $32.11. First-quarter revenue will be $2.99 billion to $3.11 billion, the Dallas-based company said. Analysts on average had estimated $3.16 billion, according to data compiled by Bloomberg. Net income will be 15 cents to 19 cents a share, compared with projections of 21 cents.

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