S&P 500 Caps Longest Rally Since March on Economic Data

Most U.S. stocks rose, giving the Standard & Poor’s 500 Index its longest rally since March, as data showing an unexpected decline in jobless claims last week tempered concern about a worsening of Europe’s economy.

A measure of homebuilders in S&P indexes advanced 2.3 percent as JPMorgan Chase & Co. (JPM) said it saw higher demand in the industry and data showed prices for single-family homes rose in most U.S. cities last quarter. E*Trade Financial Corp. (ETFC) increased 6.9 percent as Chief Executive Officer Steven J. Freiberg was ousted from the brokerage. Monster Beverage Corp. declined 9.7 percent after profit and sales trailed estimates.

Five stocks rose for every four falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 (SPX) added less than 0.1 percent to 1,402.80, rallying 2.8 percent in five days. The Dow Jones Industrial Average lost 10.45 points, or 0.1 percent, to 13,165.19. Volume for exchange-listed stocks in the U.S. was 5.5 billion shares, 18 percent below the three-month average.

“We acknowledge the positive news,” Wayne Lin, a money manager at Baltimore-based Legg Mason Inc., said in a telephone interview. His firm oversees $631.8 billion. “We’ve had some positive surprises on the jobs front and it seems that housing has found some footing. Yet people are aware of the risks. The risk in Europe is still out there.”

Labor Department data showing fewer firings signaled employers are seeing enough demand to retain staff, indicating the economy is sustaining the recovery. Stocks erased gains earlier after the Wall Street Journal reported that former European Central Bank official Otmar Issing said it was wrong to expect the ECB to buy government bonds to ease the region’s debt crisis. Economists surveyed by the ECB predicted the region’s contraction this year will be worse than previously forecast.

Earnings Season

A five-day rally has taken the S&P 500 up almost 10 percent from a five-month low on June 1. About 72 percent of S&P 500 companies which reported second-quarter results so far have beaten analysts’ earnings estimates, according to data compiled by Bloomberg.

“It’s kind of blah,” said Malcolm Polley, who oversees about $1.1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania. “Growth is slowing in other parts of the world. It will take time. In addition, we’ve had a strong move up in stocks. It may be people just getting tired.”

All 11 stocks in a measure of homebuilders in S&P indexes gained. Data from the National Association of Realtors showed that values nationally jumped the most since 2006 as real estate markets stabilized.

Analysts’ Recommendations

PulteGroup Inc. (PHM), the largest U.S. homebuilder by revenue, jumped 4.8 percent to $12.67 after being raised to overweight at JPMorgan. KB Home (KBH) added 6.3 percent to $10.74, while Beazer Homes USA Inc. (BZH) rallied 4.5 percent to $2.79 after the two companies were also raised at JPMorgan.

E*Trade added 6.9 percent to $8.57. Chairman Frank J. Petrilli will serve as interim CEO while the company seeks a new leader, the company said today in a statement. A board committee which includes the head of its biggest shareholder, Citadel LLC’s CEO Ken Griffin, will lead the search for a new chief executive, the company said.

Cisco Systems Inc. (CSCO) rose 3.2 percent to $17.70 after the biggest maker of computer-networking equipment was added to the “Conviction Buy” list at Goldman Sachs Group Inc. Piper Jaffray Cos. also raised its recommendation for the technology company today.

MBIA Inc. (MBI) added 15 percent to $10.06. The bond insurer seeking reimbursement from Bank of America Corp. over faulty mortgages surged after pledging to carry on a court fight to force the lender to repurchase the loans.

James River

James River Coal Co. (JRCC) soared 13 percent to $2.52. The producer of the fuel in Appalachia and the Midwest reported a smaller loss than analysts predicted as costs fell.

Lincoln National Corp. (LNC) climbed 2.3 percent to $23.23. The insurer that hired Ellen Cooper from Goldman Sachs Group Inc. as chief investment officer said it increased the size of its share buyback authorization to $1 billion.

Elizabeth Arden Inc. (RDEN) soared 13 percent to $44.02. The maker of the Britney Spears and Elizabeth Taylor brand fragrances forecast annual profit and revenue that topped estimates.

Alliant Techsystems Inc. (ATK) advanced 7.1 percent to $51.94. The U.S. military’s largest ammunition maker rose as higher defense sales helped first-quarter earnings top estimates. It raised its full-year forecast.

Robbins & Myers Inc. (RBN) surged 27 percent to $59.63. National Oilwell Varco Inc. (NOV), the largest U.S. maker of oil equipment, agreed to buy the company for about $2.5 billion in cash.

Monster Beverage

Monster Beverage Corp. (MNST) tumbled 9.7 percent to $61.20. Monster and Atlanta-based Coca-Cola Co. are facing higher costs for ingredients such as sweeteners and plastic for bottles.

Knight Capital Group Inc. (KCG) slid 2.9 percent to $3.07. The market maker that was driven to the verge of bankruptcy after a trading error said last week’s mishap may cause more losses and liabilities and customers may lose confidence in the firm.

Education Management Corp. (EDMC) plunged 19 percent to $3.24. The second-largest for-profit college chain by enrollment fell a day after posting a $1.2 billion loss in the fiscal fourth quarter.

SunPower Corp. (SPWR) declined 10 percent to $4.20. The solar- panel company majority-owned by Total SA tumbled after it cut its 2012 sales forecast.

Kohl’s Corp. (KSS) slid 1.2 percent to $51.42. The third-largest U.S. department-store company reduced its fiscal 2012 profit forecast after sales fell in the second quarter.

NetApp Slumps

NetApp Inc. (NTAP) dropped 2.6 percent to $32.13. The seller of hardware and software for storing data was downgraded to hold from buy at Cantor Fitzgerald LP by equity analyst Paul Mansky. The 12-month target price is $38 per share.

Asian dealmaking in North America confirms energy and gold stocks are a bargain when compared with the underlying commodities, according to Frank Holmes, U.S. Global Investors Inc.’s chief executive officer. The shares have trailed commodity prices for more than a year.

“The disparities mean that the cheapest resources are not found in the ground -- they’re listed” on stock exchanges, Holmes wrote three days ago in a blog posting.

Proposed multibillion-dollar takeovers of Canadian energy producers by Cnooc Ltd. and Petroliam Nasional Bhd show the value available in commodity stocks, according to Holmes.

Cnooc, China’s largest offshore-oil explorer, offered to acquire Nexen Inc. (NXY) in July for 61 percent more than the stock’s market price. The proposed deal followed an offer in June from Petronas, Malaysia’s state-owned energy company, for Progress Energy Resources Corp. that was 77 percent above the market price. The bid was raised last month.

Holmes’s firm, based in San Antonio, runs three commodity- related mutual funds with total assets of about $1 billion. The biggest is the Global Resources Fund, which returned 12 percent during the two-year period depicted in the chart, according to data compiled by Bloomberg.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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