U.S. stocks rose, rebounding from yesterday’s tumble, as signs of a strengthening job market bolstered optimism the economy can withstand a surge in oil.
Texas Instruments Inc. (TXN) climbed 3.3 percent as JPMorgan Chase & Co. named the company a “top pick” among chipmakers and raised its recommendation on the industry. Yahoo! Inc. rose 3.3 percent after people familiar with the matter said it may sell a stake in a Japanese venture. Apple Inc. (AAPL) added 0.8 percent as Chief Executive Officer Steve Jobs introduced the iPad 2. Energy shares had the biggest gain in the Standard & Poor’s 500 Index as oil climbed to a 29-month high of $102.23 a barrel.
The S&P 500 advanced 0.2 percent to 1,308.44 at 4 p.m. in New York, the third gain in four days. The Dow Jones Industrial Average increased 8.78 points, or 0.1 percent, to 12,066.80. Oil rallied 2.6 percent as forces loyal to Libyan leader Muammar Qaddafi counterattacked against rebels.
“This is a fairly resilient market,” said Jeffrey Davis, who oversees $5 billion as chief investment officer at Lee Munder Capital Group in Boston. “We’re in a sustainable economic recovery. Without any serious move in oil prices, you’ll probably get a market that has a firm foundation to it. In such a case, any pullback will be minor.”
The S&P 500 tumbled 1.6 percent yesterday as concern rising energy costs will hurt the economic recovery offset the fastest manufacturing growth since 2004. Still, the S&P 500 has rallied 25 percent since the end of August as reports showed an improving economy and earnings beat analysts’ estimates for the eighth straight quarter.
A private report released before exchanges opened showed that companies in the U.S. added more workers in February than forecast, indicating the labor market may be strengthening. Employment increased by 217,000 last month after a revised 189,000 gain in January, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 180,000 gain last month.
Stocks retreated from their highs of the session as two U.S. soldiers were killed in an attack at a Frankfurt airport. “We don’t know the details yet,” German Chancellor Angela Merkel told reporters in Berlin. “We will do whatever is needed to determine what happened. “It’s a terrible event.”
Equity futures erased gains before the open of exchanges after Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank should raise the target federal funds rate to 1 percent from near zero rather than ease during the current economic recovery.
Later, the Fed said the labor market improved throughout the country early this year, driven by increasing retail sales and “solid growth” in manufacturing. Overall, the economy “continued to expand at a modest to moderate pace,” the central bank said in Washington.
“Labor market conditions continued to strengthen modestly, with all Districts reporting some degree of improvement,” the Fed said today in its Beige Book report, an anecdotal account of the economy released two weeks before meetings of the Federal Open Market Committee. Its last survey, released Jan. 12, said the job market was “firming somewhat.”
A gauge of chipmakers rallied 1.3 percent, the most of 24 industries in the S&P 500. The Philadelphia Semiconductor Index of 30 stocks climbed 1.4 percent. Xilinx Inc. (XLNX) and Altera Corp. (ALTR) rose at least 3 percent.
JPMorgan raised its rating on the industry to “constructive” from “cautious,” citing a change in its belief that an economic downturn will happen in the near future.
Texas Instruments Rallies
Texas Instruments climbed 3.3 percent to $36.14 after JPMorgan raised its recommendation for the largest analog chipmaker to “overweight” from “neutral.”
Yahoo gained 3.3 percent to $16.63. The Internet company is in talks to dispose of its 35 percent stake in its Japanese joint venture with Softbank Corp. (9984), according to two people briefed on the matter. The talks focus on transferring its stake in Yahoo Japan Corp. (4689) to Softbank, said the people, confirming an earlier Reuters report and asking not to be identified because the discussions are private and may not result in an agreement.
Softbank, Japan’s third-largest mobile-phone operator, said it isn’t holding discussions to buy Yahoo Japan shares. Dana Lengkeek, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment. Chizu Sasaki, a spokeswoman for Yahoo Japan, declined to comment.
Apple rose 0.8 percent to $352.12. Steve Jobs introduced the iPad 2 in his first public appearance since taking medical leave in January. The device, a follow-up to a tablet released last April, has a faster chip, and front and rear cameras, Jobs said. It’s also 33 percent thinner than its predecessor. The iPad 2 will ship in the U.S. on March 11 and internationally on March 25, at the same $499 starting price as the previous model.
A gauge of energy shares in the S&P 500 rallied 0.5 percent, the biggest gain within 10 industries. Noble Corp. (NE), owner of the world’s second-largest fleet of offshore drilling rigs, advanced 3 percent to $44.92. Massey Energy Co. (MEE) rose 2.5 percent to $62.93.
MetLife Inc. (MET) fell 5.7 percent to $43.41. The largest U.S. life insurer said 146.8 million of its shares will be sold in public offerings as the firm raises funds to redeem securities given to American International Group Inc. in the purchase of a non-U.S. life insurer. Joy Global Inc. (JOYG) slid 2.8 percent to $94.32. The maker of P&H and Joy mining equipment had fiscal first-quarter profit of 96 cents a share. Analysts surveyed by Bloomberg had estimated profit of $1.07 on average.
The proportion of investment publications that are bullish fell to an almost four-month low of 50.6 percent between Feb. 23 and yesterday, according to New Rochelle, New York-based Investors Intelligence, which has examined forecasts in newsletters since 1963. Newsletter writers who anticipate a correction, or 10 percent decline in the market, rose to 29.9 percent, the highest since Oct. 26.
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