S&P 500 Posts Longest Winning Streak Since February on Economy

U.S. stocks rose, giving the Standard & Poor’s 500 Index its first back-to-back weekly gain since February, as reports showing faster-than-forecast growth in jobs and consumer spending bolstered economic optimism.

Caterpillar Inc. (CAT), General Electric Co. (GE) and DuPont Co. rallied at least 2 percent, pacing advances in industrial companies. AT&T Inc. (T) climbed 6.1 percent as Chief Executive Officer Randall Stephenson said the proposed takeover of T- Mobile USA would improve service for devices such as Apple Inc.’s iPhone. Schlumberger Ltd. (SLB) and Halliburton Co. (HAL) jumped more than 7.1 percent as crude oil rose to a 30-month high.

The S&P 500 added 1.4 percent to 1,332.41, the highest level since Feb. 18. The benchmark index had its biggest first- quarter rally in 13 years, climbing 5.4 percent. The Dow Jones Industrial Average increased 156.13 points, or 1.3 percent, to 12,376.72. Both gauges advanced for a second week.

“There’s economic momentum,” said Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees $784 billion. “As long as the jobs creation stays on course, it reads confidence throughout the economic landscape. Corporate earnings should be solid. There are many pockets in the market that are still attractive.”

The S&P 500 has risen almost 6 percent in 2011, extending last year’s 13 percent rally, amid government stimulus measures and as corporate earnings beat analysts’ estimates for an eighth straight quarter. The index had fallen as much as 6.4 percent from this year’s high on Feb. 18 as concern grew about Japan’s nuclear crisis and uprisings throughout the Middle East and northern Africa.

Unemployment Rate

The U.S. unemployment rate unexpectedly dropped to a two- year low of 8.8 percent in March as employers created more jobs than forecast, a Labor Department report showed yesterday. The Commerce Department said on March 28 that Americans increased spending more than forecast in February as incomes climbed.

“It points to pretty solid economic activity,” said Michael Strauss, who helps oversee $27 billion as chief investment strategist and chief economist at Commonfund in Wilton, Connecticut. “It does show recovery in the labor market. It does show that there’s a broader base building behind the economy.”

A gauge of S&P 500 industrial companies, which are among the most-tied to economic growth, rallied 2.4 percent. Caterpillar, the largest maker of construction equipment, added 3.7 percent to $113.12. GE, the largest maker of jet engines, advanced 3 percent to $20.34. DuPont rose 2 percent to $55.19.

Phone Companies Rally

Phone companies had the biggest advance of 10 industry groups in the S&P 500, rallying 4.2 percent.

AT&T rose the most in the Dow, climbing 6.1 percent to $30.62. The proposed takeover of T-Mobile USA would improve capacity on AT&T’s wireless network by about 30 percent in some of the largest U.S. cities, CEO Stephenson said on March 30. It could also reduce charges for overseas roaming, he said.

The S&P 500 Energy Index (S5ENRS) gained 1.8 percent, led by the largest oilfield services providers. Schlumberger increased 7.8 percent to $93.70, while Halliburton rose 7.2 percent to $49.34.

Crude oil advanced to $107.94 a barrel, the highest level since September 2008, as violence escalated in Libya. The strife at the holder of Africa’s largest oil reserves is the bloodiest in a wave of uprisings that has toppled the leaders of Tunisia and Egypt and spread to Algeria, Bahrain, Iran, Oman, Syria and Yemen.

M&A Deals

Cephalon Inc. (CEPH) had the biggest gain in the S&P 500, surging 31 percent to $76.04, higher than a hostile takeover bid from Valeant Pharmaceuticals International Inc. (VRX), Canada’s largest drugmaker. Valeant made a cash offer of about $5.7 billion, or $73 a share, after its private approaches were rejected. The bid for the maker of sleep drugs presents a 24 percent premium to its closing price of $58.75 on March 29.

NYSE Euronext (NYX) advanced 15 percent to $39.60. Nasdaq OMX Group Inc. (NDAQ) and IntercontinentalExchange Inc. (ICE) offered to buy the owner of the New York Stock Exchange for about $11.3 billion as the companies teamed up in an attempt to snatch the New York Stock Exchange from Deutsche Boerse AG.

“Corporate confidence is rising,” said Prudential’s Krosby. “We expect to see companies deploying their cash with strategic acquisitions and continuing to sweeten their dividends and engaging in share buybacks.”

Lennar Corp. (LEN) dropped the most in the S&P 500, tumbling 8.6 percent to $18.31. The homebuilder was cut to “neutral” from “buy” by Stephen East at Ticonderoga Securities LLC.

Marriott Slumps

Marriott International Inc. declined 6 percent to $35.41. The largest U.S. hotel chain expects first-quarter revenue per available room to rise about 7 percent, at the low end of the company’s forecast of 7 percent to 9 percent. North American demand has been below expectations, the Bethesda, Maryland-based company said.

Quarterly reports scheduled for next week include Monsanto Co. (MON), the world’s largest seed company, and Bed Bath & Beyond Inc. (BBBY), a home furnishings retailer. Wine maker Constellation Brands Inc. (STZ) is also due to report results.

Service industries in March probably expanded for a seventh consecutive month, a sign that growth in the U.S. economy is broadening beyond manufacturing, economists said ahead of a report this week.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Cecile Vannucci in New York at cvannucci1@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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