S&P 500 Posts First Back-to-Back Weekly Rallies Since October

U.S. stocks rose, sending the Standard & Poor’s 500 Index to its first back-to-back weekly gain since October, after European leaders agreed to boost a rescue fund and reports spurred optimism about the economy.

General Electric Co. (GE), Pfizer Inc. (PFE) and Travelers Cos. climbed more than 3.2 percent to lead advances in the Dow Jones Industrial Average. Financial companies in the S&P 500 climbed 1.7 percent, the most among 10 industries, after European leaders added 200 billion euros ($267 billion) to the fund and tightened rules to curb future debts. DuPont Co. dropped 4.2 percent after cutting its earnings forecast.

The S&P 500 climbed 0.9 percent to 1,255.19 after surging 7.4 percent between Nov. 25 and Dec. 2, the biggest weekly advance since 2009. The Dow rose 164.84 points, or 1.4 percent, to 12,184.26 this week, extending its 2011 gain to 5.2 percent.

“When you get positive news out of Europe, it allows investors to focus on the U.S., where the economy appears to be gaining a little traction,” Joseph Keating, who helps oversee $2 billion as chief investment officer at CenterState Wealth Management in Birmingham, Alabama, said in a telephone interview. “Basically, any fear about a double-dip recession has been taken off the table.”

The S&P 500 (SPX) erased a weekly loss on Dec. 9 after the Thomson Reuters/University of Michigan gauge of confidence among consumers topped the median economist projection. Earlier in the week, data showing that fewer Americans than forecast filed applications for unemployment benefits added to signs the job market is improving.

200-Day Average

The gain failed to keep the benchmark index for U.S. equities above its 200-day average. On each of the first three trading sessions of the week, the gauge surpassed and then slipped below its average price from the prior 200 days. It was the third time since October that rallies fizzled at that level, which is used by some traders to forecast the market.

“The market is lacking conviction,” Robert Pavlik, chief market strategist at Banyan Partners LLC in New York, said in a telephone interview. The firm manages $1.2 billion. “People are suspect about growth, or suspect about Europe. They’re worried that Europe could have a larger impact on the U.S.”

The European Central Bank lowered interest rates on Dec. 8 for a second straight month and said it may do more to stimulate bank lending and fight off a recession.

“It doesn’t look like Europe is collapsing, but where do we go from here -- what’s going to drive growth in Europe?” Pavlik said. “Europe could be facing a period of slow economic growth. That’s keeping investors on the sideline.”

Consumer Sentiment

In the U.S., the Thomson Reuters/Michigan preliminary index of consumer sentiment rose to a six-month high of 67.7 in December. The gauge was projected to rise to 65.8, according to the median forecast of 73 economists surveyed by Bloomberg News.

GE, the world’s biggest maker of jet engines, power- generation equipment, medical-imaging machines and locomotives, rallied 4.7 percent to $16.84 after raising its quarterly dividend for the fourth time in two years. Pfizer climbed 3.4 percent to $20.56, and Travelers advanced 3.3 percent to $56.02.

DuPont fell 4.2 percent to $45.04. The chemical maker cut its 2011 earnings forecast by 10 cents a share because of falling demand for consumer electronics and plastics and continued weak demand for construction products.

Gannett Co. rose the most in the S&P 500, surging 12 percent to $13.34. The newspaper owner forecast fourth-quarter broadcast revenue to rise as much as 11 percent. Lazard Capital Markets boosted the stock’s rating to “buy” from “neutral,” citing higher chances for a dividend increase.

Pall Corp. (PLL), a supplier of filters for drugmakers and refineries, jumped 5.8 percent to $56.66 after reporting first- quarter earnings that beat analysts’ estimates.

Tesoro Corp. (TSO) posted the second-biggest drop in the S&P 500, sinking 11 percent to $21.79. The oil refiner said it has “no intent” to resume dividend payments or buy back shares next year. Credit Suisse Group AG downgraded the stock to “neutral” from “outperform.”

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.