U.S. Stocks Gain Most Since July on Manufacturing Reports
Stocks, Copper Rise, Treasuries Drop on Manufacturing Growth
Jin Lee/Bloomberg
A trader works on the floor of the New York Stock Exchange in New York.
A trader works on the floor of the New York Stock Exchange in New York. Photographer: Jin Lee/Bloomberg
Sept. 1 (Bloomberg) -- Bloomberg's Elizabeth Faublas reports on the performance of the U.S. equity market today. U.S. stocks rallied the most in almost two months as better-than-estimated growth in American and Chinese manufacturing bolstered confidence in the global economic recovery. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
U.S. stocks rallied the most in almost two months as better-than-estimated growth in American and Chinese manufacturing bolstered confidence in the global economic recovery.
Caterpillar Inc. helped lead industrial companies in the Standard & Poor’s 500 Index to a 3.9 percent gain as U.S. and Chinese factory production grew at a faster pace last month. Alcoa Inc. advanced 3 percent as metal prices gained. Apple Inc. rose 3 percent after introducing iPods and a television set-top box, while Netflix Inc. jumped 7.5 percent. Burger King Holdings Inc. surged 15 percent on takeover speculation.
The S&P 500 climbed 3 percent to 1,080.29 at 4 p.m. in New York, the biggest gain since July 7. The Dow Jones Industrial Average rose 254.75 points, or 2.5 percent, to 10,269.47. More than 35 stocks in the Russell 3000 Index rallied for each that fell, the most since May 27.
“There’s a sigh of relief among the long-only funds and the short sellers are saying that maybe the sell-off is over,” said Michael Binger, a Minneapolis-based fund manager at Thrivent Asset Management, which oversees about $70 billion. “That’s why we get this explosion in the market after the mostly negative economic data from the U.S. throughout the summer.”
Equities rebounded from the biggest August plunge in nine years as the expansion in manufacturing tempered concern that the global economy will slow as governments withdraw stimulus measures. Some Federal Reserve policy makers saw greater risks to the recovery yet the central bank signaled it’s hesitant to undertake another round of debt purchases to boost growth, according to minutes of an August meeting released yesterday.
Worst Month
September is historically the worst month for stocks with the S&P 500 falling 0.7 percent and the Dow dropping 1 percent on average since 1950, according to the Stock Trader’s Almanac.
Caterpillar, the world’s largest maker of construction equipment, jumped 4.6 percent to $68.16, leading industrial stocks to the biggest gain among 10 groups in the S&P 500 as the Institute for Supply Management’s factory index unexpectedly rose to 56.3 in August from 55.5 in July. The median estimate of 78 economists surveyed by Bloomberg News forecast the measure would fall to 52.8. Readings above 50 signal growth.
U.S. equities joined a global advance triggered after China’s purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, according to a government-backed report. A separate PMI released by HSBC Holdings Plc and Markit Economics gained to 51.9 from 49.4.
Maintaining Gains
Stocks gained even after ADP Employer Services said companies in the U.S. unexpectedly cut 10,000 workers in August. The median estimate of 35 economists surveyed by Bloomberg was for a gain of 15,000. Another report from outplacement firm Challenger, Gray & Christmas Inc. showed job cuts announced by U.S. employers fell 55 percent to 34,768 last month from August 2009.
“It’s not a super-strong, V-shaped recovery, but we’re still in a growth phase and stock prices are very attractive at these levels,” said Don Wordell, a fund manager for Atlanta- based RidgeWorth Capital Management, which oversees about $62 billion. “People were so concerned about the Chinese economy slowing down, but it’s growing. It’s not as much as a negative as investors had thought.”
Economists project that a Labor Department report in two days will show companies added 42,000 workers to their payrolls in August. The average from May through July was 51,000 jobs, down from 200,000 in the previous two months.
Alcoa, Freeport
Alcoa increased 3 percent to $10.52 and Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, surged 5.8 percent to $76.19 as copper climbed to a four-month high in New York. Aluminum, nickel and other metals also gained on the manufacturing reports from the U.S. and China, the world’s largest metal users.
Exxon Mobil Corp., the world’s largest oil company, climbed 3.1 percent to $60.91. Chevron Corp., the second-largest U.S. energy producer, increased 3.6 percent to $76.77.
Energy stocks rallied 3.6 percent as a group, third-most among 10 S&P 500 industries, after crude oil rebounded from its lowest level in a week as a declining dollar and rising equity markets tempered concern that U.S. fuel supplies are excessive.
Apple advanced 3 percent to $250.33. It introduced updated versions of its market-leading iPod media players and iTunes software, including more social-networking features that let users see what their friends are downloading.
Netflix Video
Apple revamped its TV set-top box, cutting prices for video rentals and adding the ability to stream content from Netflix, whose shares jumped 7.5 percent to $134.92.
Amazon.com Inc. rose 6.1 percent to $132.49. The Web retailer has approached media companies including Time Warner Inc. with plans to start an online video-subscription service to rival Netflix, according to people with knowledge of the talks.
Burger King surged 15 percent to $18.86. The second-largest U.S. hamburger chain is in talks with 3G Capital about a buyout, said a person familiar with the matter. The discussions may not lead to a deal, said the person, who declined to be identified because talks are still in progress. The New York Times reported the talks with 3G earlier.
Eli Lilly & Co. gained 1.8 percent to $34.20. The world’s biggest maker of psychiatric drugs won a court order banning sales of generic versions of the attention-deficit treatment Strattera until a patent appeal is decided.
Saks, Transocean
Saks Inc. fell 6.1 percent to $7.42. Carlos Slim, whose Inmobiliaria Carso investment fund is the biggest holder of the New York luxury retailer, said he isn’t aware of a takeover offer for the company. Saks jumped 20 percent yesterday after the Daily Mail reported the retailer may receive an offer $11 a share from U.S. and British buyout firms.
Transocean Ltd. climbed 6.7 percent to $54.33. Seadrill Ltd., an oil-rig operator controlled by billionaire John Fredriksen could buy the offshore drilling contractor, Norwegian newswire TDN Finans reported today.
Brown-Forman Corp. lost 4.5 percent to $58.52 for the biggest drop in the S&P 500. The maker of Jack Daniel’s whiskey and Finlandia vodka posted fiscal first-quarter profit of 76 cents a share, trailing the average analyst estimate by 8.9 percent, according to Bloomberg data.
To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net.
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