U.S. Stocks Advance on Leading Indicators, Sentiment Data

May 17 (Bloomberg) -- Bloomberg’s Trish Regan, Adam Johnson and Matt Miller report on today’s ten most important stocks including J.C. Penney, Disney and Facebook. (Source: Bloomberg)

U.S. stocks rose, giving the Standard & Poor’s 500 Index its fourth straight week of gains, as gauges for leading indicators and consumer sentiment advanced more than estimated.

Northrop Grumman Corp. climbed 4 percent after increasing its share-buyback program by $4 billion. Boeing Co. and JPMorgan Chase & Co. added more than 2.4 percent, pacing gains in the Dow Jones Industrial Average (INDU) as a gauge of cyclical stocks rallied. J.C. Penney Co. slid 4.2 percent after its first-quarter loss widened.

The S&P 500 (SPX) rose 1 percent to 1,667.47 at 4 p.m. in New York. The equity benchmark closed at a fresh record and added 2.1 percent this week. The Dow advanced 121.18 points, or 0.8 percent, to 15,354.40, also a record.

“You’ve got the leading indicators helping the market today,” Thomas Nyheim, a Wilmington, Delaware-based fund manager for Christiana Trust, which oversees about $16 billion, said in a phone interview. “We’re seeing good signs for the economy, you’re getting this grinding, slow growth that just keeps coming out.”

The index of U.S. leading indicators climbed in April, a rebound from March that suggests the world’s largest economy may be poised for further expansion. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.6 percent last month after falling a revised 0.2 percent in March that was steeper than previously reported, the New York-based group said today

Consumer Sentiment

Americans’ confidence in the economy climbed in May to the highest level in almost six years as rising real estate values and record stock prices boosted household wealth. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 83.7, the highest since July 2007, from 76.4 in April, a report today showed.

The U.S. bull market has entered its fifth year. The S&P 500 has surged 146 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Federal Reserve. Equities lost 0.5 percent yesterday as economic data missed forecasts and investors speculated the Fed will slow the pace of stimulus as early as this summer.

The rally pushed 193 stocks in the S&P 500, or 39 percent of the gauge, to their highest levels in at least 52 weeks on May 15, the most in Bloomberg data going back to 1993.

About 90 percent of stocks in the benchmark index traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg, approaching the two-year high of 93 percent reached in January.

VIX Drops

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 Index (SPX) option prices known as the VIX, slid 4.7 percent to 12.45, the lowest in five weeks. Options contracts on stocks, exchange-traded funds and indexes expired today, leading investors to adjust their holdings of some securities. More than 6.2 billion shares traded hands on U.S. exchanges, in line with the three-month average.

Companies whose earnings are most tied to economic swings led today’s advance. The Morgan Stanley Cyclical Index rose 1.7 percent to a record close. JPMorgan Chase added 2.6 percent to $52.30, the biggest increase in the Dow.

Energy and industrial companies increased at least 1.5 percent for the biggest gains among 10 groups in the S&P 500 today.

Boeing, the world’s largest plane maker, rose 2.4 percent to $98.92, the highest since October 2007. United Technologies Corp., maker of Pratt & Whitney jet engines and Otis elevators, advanced 2.3 percent to a record $97.35.

Northrop Buyback

Northrop Grumman climbed 4 percent to $82.19, an all-time high. The weapons maker said it will add $4 billion to an existing $1 billion share-repurchase program and retire 25 percent of its shares outstanding by 2015.

Automaker shares jumped 3 percent as a group, the most among 24 industries in the S&P 500. Goodyear Tire & Rubber Co. surged 7 percent to $14.74 and Ford Motor Co. added 3 percent to $15.08. European Union car sales rose in April for the first time since September 2011, the Brussels-based European Automobile Manufacturers’ Association said today.

An S&P gauge of homebuilders added 1.9 percent as all 11 stocks in the index rose. PulteGroup Inc. jumped 2.6 percent to $23.95.

J.C. Penney dropped 4.2 percent to $18.01 after its first-quarter loss widened as the department-store chain works to rebound from former Chief Executive Officer Ron Johnson’s failed makeover. CEO Myron Ullman, who took the position back from Johnson last month, has been increasing promotions to revive sales while pursuing a $1.75 billion loan.

Nordstrom Sales

Nordstrom Inc. retreated 0.7 percent to $60.68 after the retailer posted first-quarter revenue that trailed analysts’ estimates and cut its sales forecast for the year.

Brocade Communications Systems Inc. slumped 3.5 percent to $5.54 after the maker of network equipment said it expects third-quarter adjusted earnings of 11 cents to 13 cents a share, trailing the average forecast of 15 cents by analysts in a Bloomberg survey.

Autodesk Inc. tumbled 6.7 percent to $37.11. The maker of engineering-design software said it sees full-year revenue growth of 3 percent, lower than its February forecast of 6 percent.

To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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