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S&P 500 Has Biggest Weekly Advance in a Year on Retail Sales; Alcoa Jumps
U.S. stocks gained four straight days, giving the Standard & Poor’s 500 Index the biggest weekly rally in a year, as retailers eased concern about the economy and the International Monetary Fund raised its growth forecast.
Alcoa Inc., Caterpillar Inc. and Bank of America Corp. rose more than 9 percent after U.S. retail sales grew at the fastest pace in four years and the IMF projected global economic growth of 4.6 percent in 2010. Anadarko Petroleum Corp. surged 19 percent as BP Plc said it may capture all oil leaking from its Gulf of Mexico beginning July 13. Abercrombie & Fitch Co. rose 16 percent after beating the average analyst sales forecast.
The S&P 500 rose 5.4 percent to 1,077.96 this week as its 10 main industries advanced at least 1.8 percent each. The Dow Jones Industrial Average also had its biggest weekly gain since July 2009, adding 511.55 points, or 5.3 percent, to 10,198.03.
“The concern in prior weeks was about the continued spread of the economic crisis potentially pulling the U.S. into a double-dip recession,” said Eric Teal, who oversees about $4.5 billion as chief investment officer at First Citizens BancShares Inc. in Raleigh, North Carolina. “What we’re seeing from the economic releases this week and in anticipation of good earnings is that that’s an unlikely scenario.”
Stocks rebounded this week after sinking 16 percent between April 23 and July 2, driven lower by concern that less spending by indebted European nations will curb global growth. Alcoa Inc. will become the first Dow company to post second-quarter results on July 12. Profit for S&P 500 companies increased 34 percent in the April-to-June period and will grow by the same amount in all of 2010, according to the average analyst estimates in a Bloomberg survey.
Jobs Report
Alcoa, which is forecast to earn 11 cents a share, rallied 9.4 percent to $10.94 this week for the biggest weekly gain since December. Caterpillar advanced 9.4 percent to $64.72 and Bank of America climbed 9.2 percent to $15.11. Gains were fueled by a U.S. Labor Department report showing the number of Americans applying for jobless benefits decreased more than the median economist forecast.
“You got a couple of catalysts from economic data,” said John Canally, a Boston-based economist at LPL Financial, which oversees $285 billion. “Trading volumes have been low so any positive catalyst would be felt, and we got a few this week.”
Fewer than 6.7 billion shares changed hands on U.S. stock exchanges yesterday, the lowest single-day level of the year. Last week’s daily average of 8.2 billion compares with the 2010 mean of 9.48 billion.
Air Conditioning
U.S. retailers reported sales gains in June as record-high temperatures on the East Coast pushed more shoppers into air- conditioned malls. Abercrombie & Fitch shares had the biggest rally of a gauge of 31 retailers on the S&P 500, surging 16 percent to $36.06, as sales at stores open at least a year rose 9 percent gain compared with a 2.9 percent estimated rise.
Sales at the second- and third-largest U.S. department stores also topped estimates. J.C. Penney Co. Inc. jumped 10 percent to $23.36 and Macy’s Inc. gained 3.8 percent to $18.53.
Retailers whose sales trailed analysts’ estimates declined. Family Dollar Stores Inc. fell 6.8 percent, the most in the S&P 500, to $36. Gap Inc. fell 4.9 percent to $18.53
BP rallied 16 percent to $34.05 after the company said it may complete a relief well ahead of schedule that will help plug the leak from its damaged well spewing as much as 60,000 barrels of oil a day into the Gulf of Mexico. Anadarko Petroleum, the Texas oil company that owns a 25 percent stake in BP’s well, soared 19 percent, the most the in the S&P 500, to $45.41.
Raw Materials
Commodity stocks advanced this week as the S&P GSCI Total Return Index of 24 raw materials had its biggest gain since April.
AK Steel Holding Corp., third-largest U.S. steelmaker, climbed 14 percent to $13.38. U.S. Steel Corp., the largest U.S.-based steelmaker, jumped 14 percent to $42.88. Monsanto Co., the world’s largest seed maker, rose 10 percent to $51.21.
The VIX, as the Chicago Board Options Exchange Volatility Index is known, dropped 17 percent to 24.98 this week. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from this year’s closing high of 45.79 on May 20.
To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net.
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