U.S. Stocks Rise on Morgan Stanley Investment, Confidence Data
U.S. Stocks Retreat
Jin Lee/Bloomberg
Traders work on the floor of the New York Stock Exchange in New York.
Traders work on the floor of the New York Stock Exchange in New York. Photographer: Jin Lee/Bloomberg
Aug. 31 (Bloomberg) -- Bloomberg's Elizabeth Faublas reports on the performance of the U.S. equity market today. Stocks rose, trimming the biggest August slump since 2001, as regulators approved a Chinese investment in Morgan Stanley and gains in home prices and consumer confidence tempered concern the economy is faltering. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
Aug. 31 (Bloomberg) -- Barton Biggs, co-founder of Traxis Partners LP, talks about his investment strategy and the likelihood the U.S. economy will fall back into recession. Biggs also discusses the possibility that JPMorgan Chase & Co. will close its proprietary trading unit, regulation of the financial industry and U.S. economic policies. He talks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Aug. 31 (Bloomberg) -- Rick Bensignor, chief market strategist at Execution Noble Ltd., talks about the performance of U.S. stocks and the outlook for equities. Bensignor talks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Aug. 31 (Bloomberg) -- Barry Knapp, the chief U.S. equity strategist at Barclays Capital Inc., talks about the outlook for the U.S. stock market. Barry Knapp, speaking with Matt Miller, Carol Massar, Julie Hyman and Dominic Chu on Bloomberg Television's "Street Smart," also discusses Federal Reserve policy, investor sentiment and the U.S. economy. PTI Securities & Futures LP's Daniel Haugh also speaks. (Source: Bloomberg)
U.S. stocks rose, trimming the biggest August slump since 2001, as regulators approved a Chinese investment in Morgan Stanley and gains in home prices and consumer confidence tempered concern the economy is faltering.
Morgan Stanley jumped 1.1 percent as the Federal Reserve approved China Investment Corp.’s plan to buy as much as 10 percent of the company. AT&T Inc., JPMorgan Chase & Co. and Merck & Co. gained at least 1.2 percent to lead the Dow Jones Industrial Average higher. Benchmark indexes recovered after an hour-long afternoon slump triggered when the Fed signaled it doesn’t plan large-scale asset purchases to bolster the economy.
The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,049.33 as of 4 p.m. in New York, reversing a 0.8 percent loss. The Dow Jones Industrial Average gained 4.99 points, or 0.1 percent, to 10,014.72.
“The market is oversold, there’s no question about that,” said Michael Mullaney, who manages $9 billion at Fiduciary Trust Co. in Boston. “The macroeconomic environment in general is still relatively dire. Until we get some stability there’s not much chance that the market is going to do appreciably better.”
The S&P 500 lost 4.7 percent this month and is down almost 6 percent in 2010 amid concern the recovery from the worst economic slump since the Great Depression is stalling.
Fed Minutes
Benchmark indexes briefly erased gains after 2 p.m. in New York as minutes from the latest Federal Open Market Committee meeting disappointed investors speculating the central bank would resume “quantitative easing,” or the purchase of debt, to bolster the economy.
Some Federal Reserve officials were concerned their decision to maintain their balance sheet would send an unintended signal the central bank is ready to resume large- scale asset purchases, minutes of the Aug. 10 meeting showed. A few policy makers said the economic effects of the decision “likely would be quite small,” while others voiced concern that further shocks would cause “significant slowing in growth.”
AT&T rose 1.5 percent to $27.03. JPMorgan Chase advanced 1.4 percent to $36.36, and Merck gained 1.2 percent to $35.16.
The S&P/Case-Shiller index of property values increased 4.2 percent from June 2009, the group said today in New York. The rise reflected the influence of a government tax incentive and a sign the market was stabilizing before sales plunged in July.
Home Prices, Consumer Confidence
The June gain in home prices reflected the influence of a government tax incentive and a sign the market was stabilizing before sales plunged in July. The median estimate of economists surveyed by Bloomberg News called for a 3.5 percent advance. The index is a moving three-month average, so the June data were still being influenced by transactions in April and May that may have benefited from the government incentive.
“There’s an awful lot of positive stuff here in our numbers today,” Karl Case, co-creator of the home-price index and a former economics professor at Wellesley College in Massachusetts, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “You’ve had a continuing increase of almost a year now.”
The housing market is “not quite stabilized yet, but it looks like it’s beginning to,” Case said. “So I’d say another couple of years before you can really declare victory.”
Toll Brothers, the largest builder of luxury houses in the U.S., rallied 1.3 percent to $17.29.
Stocks moved higher after the Conference Board’s consumer- confidence index increased to 53.5 in August from a five-month low of 51 in July, figures from the New York-based private research group showed today. The median forecast of economists in a Bloomberg News survey was for a gain to 50.7.
Bank Profits
Financial shares rallied to the second-biggest gain of 10 industry groups in the S&P 500 after the Federal Deposit Insurance Corp. said U.S. lenders posted their biggest quarterly profit in almost three years, even as the number of banks at risk of failure rose to 11 percent of insured institutions. Bank profits totaled $21.6 billion in the second quarter, an increase from $18 billion in the first quarter, the FDIC said.
Comerica Inc. gained 2.9 percent to $34.41. The Dallas- based bank, was raised to “outperform” from “neutral” at Robert W. Baird & Co. Inc.
Morgan Stanley advanced 1.1 percent to $24.69 after the Federal Reserve approved China Investment Corp.’s application to take as much as a 10 percent stake in Morgan Stanley through the conversion of premium equity units that it purchased in 2007.
Dean Foods Rises
Dean Foods Co. climbed second most in the S&P 500, adding 4.3 percent to $10.22. The biggest U.S. maker of dairy products is seeing increased activity in its options trading “surrounding unsubstantiated takeover rumors,” according to a note from Susquehanna International Group LLP. Trading of call options to buy the stock exceeded 5,300 contracts, or five times the four-week average. Barry Sievert, a Dean Foods spokesman, didn’t immediately return a call for comment.
Retailers rallied after sales at stores open at least a year rose last week by 3 percent from the year before, according to Johnson Redbook Research. J.C. Penney Co. advanced 2.5 percent to $19.98. Macy’s Inc. increased 1.2 percent to $19.41.
Saks Inc. jumped 20 percent to $7.90. The New York-based luxury retail chain may get a bid of $11 a share, or $1.7 billion, from a consortium of U.S. and U.K. private equity firms, the Daily Mail reported.
Lions Gate Entertainment Corp. rose 10 percent to $7.14. Billionaire investor Carl Icahn, owner of about 33 percent of the movie studio, increased his offer to buy the remainder of the stock to $7.50 a share from $6.50.
Semiconductors Drop
Shares of semiconductors fell the most of 24 industry groups in the S&P 500. Intel Corp.’s agreement to purchase Infineon Technologies AG’s wireless business could give the largest chipmaker a cost advantage over Marvell Technology Group Ltd., which declined 3.4 percent to $15.91; Broadcom Corp., which slumped 6.4 percent to $29.96, the most in the S&P 500; and Qualcomm Inc., which gained less than 1 percent to $38.30, according to Goldman Sachs Group Inc.
Monsanto declined 5.8 percent, second most in the S&P 500, to $52.65, after it said it earned $2.45 a share at most in the fiscal year ending today, compared with a previous forecast of as much as $2.60 a share.
VF, RIM
VF Corp. sank 3.1 percent to $70.57. The world’s largest apparel maker was downgraded to “neutral” from “overweight” at Piper Jaffray.
Research In Motion Ltd. lost 6 percent to $42.84. The Blackberry maker faces “a scary outlook” in the corporate market, Sanford C. Bernstein & Co. said in a note, citing the segment’s high e-mail penetration and the threat from other smartphone makers.
Mediacom Communications Corp. plunged 15 percent to $5.80. The seventh-largest U.S. cable operator’s founder and Chief Executive Officer Rocco B. Commisso withdrew his bid to take the company private after its board rejected a sweetened offer.
Strayer Education Inc.3TMBPZ5IXMPU&peplid=16428726&pepllastname=Gammeltoft&peplfirstname=Nikolaj&peplcompanyname=Bloomberg_News&peplcompanynumber=603036&pepltitle=No_Title_Info&interviewstatus=0&interviewdate=2010-08-31_15_10_20&interviewreporterpepl=0&intervieweditorpepl=15353471&intervieweditoremail=kbit@bloomberg.net&interviewsource=News_Reporter_Software&srange=6696&erange=6714">Nikolaj Gammeltoft, Whitney Kisling, Scott Lanman and Joshua Zumbrun in New York and Sarah Jones in London. Editors: Joanna Ossinger, Michael P. Regan
To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net.
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