Gap Inc. added 5.6 percent, pacing gains with discretionary stocks after forecasting profit that topped estimates. Nvidia Corp. rose 4.5 percent as fiscal first-quarter sales and earnings exceeded projections. Priceline.com Inc. increased 3.8 percent to its highest in 14 years after reporting better-than-forecast results. Apple Inc. (AAPL), the world’s most valuable company, lost 0.8 percent.
The S&P 500 increased 0.4 percent to a record 1,633.70 at 4 p.m. in New York. The index rallied 1.2 percent this week. The Dow Jones Industrial Average added 35.87 points, or 0.2 percent, to 15,118.49, an all-time high. Almost 5.7 billion shares traded hands on U.S. exchanges today, or 9 percent below the three-month average.
“The party continues,” Rex Macey, who oversees $20 billion as chief investment officer at Wilmington Trust Investment Advisors in Atlanta, said by telephone. “Bad news is out there, which continues to be what’s going on in Europe. Japan is better. The U.S. seems to be doing fine. Earnings are supportive of the equity market. We’ve got the Fed and central banks that are supportive. We’re in this low interest rate, low inflation environment, and that’s pretty good for equities.”
The U.S. bull market has entered its fifth year. The S&P 500 has surged 141 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Fed.
The central bank said May 1 it will maintain its bond buying at a pace of $85 billion a month and is prepared to raise or lower the level of purchases as economic conditions evolve. It also plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent.
Group of Seven finance ministers started a two-day meeting in Aylesbury, north of London, today. Central banks worldwide have announced 511 interest-rate cuts since June 2007, according to a Bank of America Corp. tally done before Vietnam and Sri Lanka lowered their policy rates today.
U.S. stocks retreated yesterday, snapping a streak of five straight records for the S&P 500, after Federal Reserve Bank of Philadelphia President Charles Plosser said he favors scaling back the central bank’s stimulus as early as the next Federal Open Market Committee meeting, which is scheduled for June 18-19.
“We’re in the late stages of an accommodative Fed,” Andrew Slimmon, Chicago-based managing director of global investment solutions at Morgan Stanley Smith Barney, said by phone. His firm has $1.7 trillion in client assets. “They may change policy next year, so this stock market at some point is going to discount a change in policy. That’s going to temper the bull market in equities. I don’t think that’s going to happen soon. It’s likely going to be next year.”
The Chicago Board Options Exchange Volatility Index, or VIX, fell 4.1 percent to 12.59. The equity volatility gauge is down 2 percent for the week and its loss for the year is 30 percent.
Consumer discretionary stocks rallied, gaining 0.8 percent. Gap added 5.6 percent to $40.99. The largest U.S. apparel chain forecast first-quarter profit that topped analysts’ estimates. Earnings will be as much as 69 cents a share, exceeding the 56-cent profit projected by analysts on average.
Priceline.com Inc. increased 3.8 percent to $765.41, the highest since May 1999. The largest U.S. online-travel agent by market value reported first-quarter profit and sales that exceeded analysts’ estimates as travelers used the site to book hotel rooms.
Nvidia climbed 4.5 percent to $14.54 after the maker of graphics processors said net income rose to $77.9 million, or 13 cents a share, in the quarter ended April 28. Sales increased 3.2 percent to $954.7 million. Analysts on average had forecast earnings of 10 cents on sales of $940.7 million.
About 72 percent of S&P 500 companies that have reported quarterly results since the start of the earnings season have exceeded analysts’ profit estimates, while 52 percent missed sales projections, according to data compiled by Bloomberg.
Warner Chilcott Plc soared 20 percent to $18.01 after Actavis Inc. said it’s in early-stage talks to buy the drugmaker. Actavis, the largest U.S. maker of generic drugs by market value, jumped 12 percent, the most in the S&P 500, to $119.86.
The discussions come just a few weeks after Actavis weighed a merger with fellow generics maker Valeant Pharmaceuticals International Inc., said people familiar with the process, who asked not to be named because the negotiations are private.
Molycorp Inc. (MCP) surged 31 percent, its biggest increase ever, to $7.34 after posting a net loss of 15 cents a share for the first quarter. Analysts had predicted a loss of 30 cents apiece, according to a Bloomberg survey. Revenue of $146.4 million beat the median analyst estimate of $137.3 million.
Energy companies posted the biggest decline out of 10 S&P 500 groups, erasing 0.5 percent as crude prices fell for a second day. The price of oil slid 0.4 percent to settle at $96.04 a barrel, as the dollar climbed, reducing the appeal of raw materials priced in the U.S. currency. Gold for June delivery fell by the most in a week. Exxon Mobil Corp. dropped 1 percent to $90.14, while Chevron Corp. erased 0.3 percent to $123.23.
Apple (AAPL) sank 0.8 percent to $452.97, after earlier rising as much as 0.6 percent. While the iPhone maker has jumped 16 percent since hitting a 16-month low on April 19, shares failed to stay above their 100-day moving average of $460.43, according to Bloomberg data. Apple closed above the 100-day moving average on May 8 for the first time since October 2012, the data show.
CareFusion Corp. (CFN) tumbled 3.1 percent, the second-most in the S&P 500, to $33.59. The maker of medical pumps, ventilators and medicine dispensers said sales for 2013 will be flat to down by a “low” single-digit percent. The San Diego-based company had predicted in February revenue would increase 1 to 3 percent.
Hess Corp. fell for the fifth straight day, losing 2.3 percent to $69.30. The oil company that’s in a proxy battle with billionaire Paul Singer’s Elliott Management Corp. will strip Chief Executive officer John B. Hess of the chairmanship after its annual meeting next week.
John Krenicki, a company nominee and former CEO of General Electric Co.’s energy unit, will become chairman if he’s elected to the board at the May 16 meeting.
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