U.S. Stocks Increase a Day After the Biggest S&P 500 Advance Since July
Sept. 2 (Bloomberg) -- Bloomberg's Elizabeth Faublas reports on the performance of the U.S. equity market today. U.S. stocks rose, with the Standard & Poor’s 500 Index building on its biggest rally in almost two months, after retail sales improved, initial jobless claims fell and pending home sales unexpectedly increased. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
Sept. 2 (Bloomberg) -- The number of Americans seeking jobless benefits fell by 6,000 to 472,000 in the week ended Aug. 28, in line with the median forecast of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. Bloomberg's Betty Liu and Michael McKee report. (Source: Bloomberg)
U.S. stocks rose, with the Standard & Poor’s 500 Index building on its biggest rally in almost two months, after retail sales improved, initial jobless claims fell and pending home sales unexpectedly increased.
Nordstrom Inc., J.C. Penney Co. and Limited Brands Inc. advanced at least 3.2 percent after reporting August same-store sales that beat analyst estimates. Burger King Holdings Inc. gained 25 percent after affiliates of 3G Capital offered $4 billion for the company. Mariner Energy Inc. sank 2.6 percent after an explosion at its Gulf of Mexico rig.
The S&P 500 increased 0.9 percent to 1,090.10 at 4 p.m. in New York, the biggest two-day gain since early July. The Dow Jones Industrial Average climbed 50.63 points, or 0.5 percent, to 10,320.10.
“Today’s numbers are not going to hurt the market,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York, which manages $2 billion. “The more we see the economic data stabilize, and hopefully in time improve, the more upside we see to the market. The payroll numbers tomorrow are going to be critical.”
Stocks rebounded yesterday from the biggest August plunge in nine years, with the S&P 500 surging 3 percent, as faster- than-estimated growth in manufacturing tempered concern that the global economy will slow as governments withdraw stimulus measures. The S&P 500 remains 10 percent below this year’s high in April amid concern that a slowdown in the economic recovery is harming the profitability of its companies.
Retailers Rally
Retailers helped shares of consumer discretionary companies climb the most of 10 industry groups in the S&P 500. August same-store sales rose 3.5 percent, according to Retail Metrics Inc., beating the group’s forecast of 2.8 percent as back-to- school discounts and tax holidays lured consumers to malls.
Nordstrom advanced 8.1 percent to $32.76, the most in the S&P 500. The department-store chain with more than 100 namesake locations said August comparable sales rose 6.3 percent, beating analyst estimates for a 5.5 percent growth.
J.C. Penney rose 3.2 percent to $21.41. The third-biggest U.S. department-store chain said August same-store sales increased 2.3 percent, compared with growth of 1.6 percent in an analyst survey.
Limited Brands Inc. climbed 6.1 percent to $25.75. Sales at the owner of the Victoria’s Secret chain climbed 10 percent, more than the 7 percent average of analysts’ estimates compiled by Retail Metrics.
Abercrombie & Fitch Co. fell 3.9 percent to $35.16, the most in the S&P 500. While same store sales rose in August, promotions probably contributed to the gain, and sales growth is decelerating, Howard Tubin, an analyst at RBC Capital Markets, said in a report.
Burger King Buyout
Burger King surged 25 percent to $23.59 after it agreed to be acquired by 3G Capital in a deal valued at $4 billion including debt, giving the New York investment firm control over the second-largest U.S. hamburger chain. The $24-a-share price is 46 percent more than Burger King’s $16.45 close on Aug. 31, before reports of a deal surfaced.
Wendy’s/Arby’s Group Inc., the third-largest U.S. fast-food chain, rose 6.8 percent to $4.40.
3Par Inc. rose 2.5 percent to $32.88. Hewlett-Packard Co. offered to buy the maker of storage systems for about $2.3 billion, ending an 18-day battle with Dell Inc. and stepping up its rivalry with EMC Corp. Dell rose 2 percent to $12.36.
Mariner, Apache
Mariner Energy sank 2.6 percent to $22.75 after the Coast Guard said the company’s platform in the Gulf of Mexico was struck by an explosion, U.S. Coast Guard Petty Officer Casey Ranel said in a telephone interview.
Apache Corp., the energy company that last month agreed to buy $7 billion in assets of BP Plc after BP’s Gulf of Mexico well caused the biggest U.S. offshore oil spill, fell 1.3 percent to $91.30.
Anadarko Petroleum Corp. increased 3 percent to $50.24. BHP Billiton Ltd. may be interested in buying the U.S. partner in BP Plc’s damaged Gulf of Mexico well, the Australian newspaper said.
Initial jobless claims fell by 6,000 to 472,000 in the week ended Aug. 28, in line with the median forecast of economists surveyed by Bloomberg News, Labor Department figures showed. Applications exceeded the 463,000 average so far this year.
The index of pending home resales rose 5.2 percent after a revised 2.8 percent drop the prior month, National Association of Realtors figures showed. A 1 percent decline was projected for July, according to the median forecast in a Bloomberg News survey of economists.
Homebuilders Rise
Homebuilders and home-improvement retailers advanced after the industry report. D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, rose 2.5 percent to $10.98. Home Depot Inc., the biggest home-improvement retailer, gained 2.6 percent to $29.41. Lowe’s Cos., Home Depot’s rival, advanced 3.3 percent to $21.94.
Forest Laboratories Inc. gained 5.6 percent to $29.19. The drugmaker’s experimental antibiotic works as a treatment for pneumonia and skin infections, according to U.S. regulators weighing whether the drug should be cleared for sale.
Wynn Resorts Ltd. jumped 2.5 percent to $84.67. Casino revenue in Macau, the world’s biggest gambling hub, rose 40 percent to $2 billion in August after Wynn and its rivals added tables for high-stakes bettors. Revenue at Wynn and five other casino operators in the former Portuguese colony surged 63 percent from a year earlier in the eight months through August, according to Macau’s Gaming Inspection and Coordination Bureau.
Cigna, Collective Brands
Cigna Corp. declined 1.6 percent to $33.02. The fifth- biggest U.S. health insurer by enrollment said Chief Financial Officer Annmarie T. Hagan will leave her post effective immediately. Thomas A. McCarthy, currently vice president and treasurer, will be the acting replacement.
Collective Brands Inc. slumped 9.1 percent to $12.51. The owner of Payless ShoeSource stores reported second-quarter earnings that fell short of the average projection of analysts surveyed by Bloomberg. Revenue also missed estimates.
The S&P 500 has advanced for three straight days and is trading at its highest level since Aug. 18. Still, yesterday’s 3 percent rally was missing the hallmarks of a move that’s likely to last, said Jeffrey deGraaf, the top-ranked technical analyst.
The market’s trend turned negative in July and remains so in September, historically the worst month for stocks, deGraaf said in an interview. Equities aren’t “oversold,” and while investor sentiment has deteriorated, it hasn’t reached a pessimistic extreme, he said.
Rally ‘Noise’
“It’s noise,” deGraaf said of the advance yesterday. “I would be more encouraged if volumes were heavier, if sentiment had reached what I thought was a capitulative extreme. Admittedly it’s choppy, but I don’t think it’s for real.”
At MKM Partners LP, strategists forecast the benchmark index for U.S. stock options may fall below 20 for the first time in four months even after a “lackluster” report tomorrow that may show that the labor market is “recovering sluggishly.”
The VIX, as the Chicago Board Options Exchange Volatility Index is known, is likely to drop below its 20.4 average from the past two decades, Stamford, Connecticut-based options strategist Jim Strugger wrote in a note to clients today. The gauge has fallen by almost half since this year’s peak in May, declining 2.9 percent to 23.19 today.
Economists on average forecast that government data tomorrow will show private employers added 42,000 jobs in August, while a reduction in census workers dragged total payrolls down by 100,000 and pushed the unemployment rate up to 9.6 percent.
To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net.
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