U.S. Stocks Rise as Intel, Deals Overshadow Iraq Violence

U.S. stocks rose, with the Standard & Poor’s 500 Index paring its first weekly decline in a month, as a rally in Intel Corp. and corporate deals overshadowed concern that violence in Iraq will disrupt oil supplies.

Intel jumped the most in three years after raising its sales forecasts for the second quarter and the full year. Express Inc. surged 21 percent after Sycamore Partners said it plans to buy the clothing chain. Priceline Group Inc. dropped 3 percent after agreeing to buy OpenTable Inc. for $2.6 billion in cash. Citigroup Inc. fell 1.4 percent after the U.S. Justice Department said it will seek $10 billion as part of a probe into mortgage-backed bond sales.

The S&P 500 (SPX) rose 0.3 percent to 1,936.15 at 4 p.m. in New York, trimming its first weekly slide in a month to 0.7 percent. The equities benchmark nearly erased its gains in the final hour of trading before capping its first advance in four days. The Dow Jones Industrial Average climbed 41.55 points, or 0.3 percent, to 16,775.74. About 5.1 billion shares changed hands on U.S. exchanges today, 18 percent below the three-month average.

“There’s a lot of potential uncertainty surrounding the situation in Iraq,,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said by phone. “Any time you have conflict around the world, and especially there, where we’ve withdrawn troops from just in the past year, it can cause some nervousness.”

The S&P 500’s gain today halted its longest losing streak in two months. The gauge has advanced 6.6 percent since a low on April 11 as data showed the economy is recovering from the impact of extreme weather earlier this year. It had closed at a record for four straight sessions through June 9.

Iraq Insurgency

Islamist fighters in Iraq extended their advance today, entering two northeastern towns as government forces failed to halt an offensive that triggered concern over a civil war and prompted the U.S. not to rule out airstrikes.

The insurgency highlights the risks to oil supply from a nation forecast to provide about 60 percent of OPEC’s output growth for the rest of this decade, the International Energy Agency said.

Investors are also watching data to determine the strength of the world’s largest economy. Reports yesterday on jobless claims and retail sales fell short of estimates.

Wholesale prices in the U.S. unexpectedly fell in May, suggesting demand isn’t robust enough to push inflation closer to the Federal Reserve’s target.

The Thomson Reuters/University of Michigan index of consumer sentiment unexpectedly fell this month from 81.9 in May, a report today indicated.

Consumer Fatigue

“I think there’s some consumer fatigue,” Ian Kerrigan, global investment specialist at JP Morgan Private Bank in Seattle, said in a phone interview. “It comes down to how important the consumer is to our economy and if they don’t have that confidence to go out and spend or be employed and have that discretionary income, that definitely has an impact on the recovery.”

The Fed is watching the labor market as it moves to complete a monthly stimulus program late this year. Policy makers meet next week, with a decision on rates and bond buying due June 18. The stimulus has helped propel the S&P 500 higher by as much as 188 percent from its bear-market low in March 2009.

The Chicago Board Options Exchange Volatility Index slid 4.4 percent to 12.01. The gauge, known as the VIX, has jumped 12 percent this week.

Nine of the 10 main S&P 500 groups advanced today, with technology stocks rallying behind Intel. An S&P 500 index of semiconductor companies surged 2.9 percent for its 16th gain in the past 17 sessions, leaving it at the highest in 10 years.

Semiconductor Rally

Intel jumped 6.8 percent to $29.87, the biggest gain in three years. The world’s largest semiconductor maker raised its second-quarter revenue forecast and said annual sales will increase for the first time since 2011, buoyed by improving business demand for personal computers.

Applied Materials Inc., which manufactures and services semiconductor wafer fabrication equipment, gained 2.9 percent to $22.37, poised for the highest close in almost seven years. Micron Technology Inc., the largest U.S. maker of memory chips, gained 1 percent to $31.17.

“Large companies like Intel have broad geographic coverage, disparate lines of business, so positive news can be a sign that things are good generally,” Lawrence Creatura, Rochester-based portfolio manager at Federated Investors Inc., which oversees $366 billion in assets. “It can help market sentiment.”

Corporate Deals

Express jumped 21 percent to $16.45. Sycamore Partners told the company’s board it would like to perform due diligence to determine an offer price. Sycamore owns a 9.9 percent stake in Express.

International Game Technology surged 11 percent to $15.86, the highest in three months. The world’s largest maker of slot machines, which has been exploring a sale for two months, has received bids from include lottery operator GTech SpA and billionaire Ron Perelman’s MacAndrews & Forbes Holdings Inc., Reuters reported.

OpenTable rallied 48 percent to $104.48. Priceline, the online travel agent, offered $103 a share, 46 percent above OpenTable’s closing price yesterday. Priceline dropped 2.5 percent to $1,195.61.

Finisar Corp. sank 22 percent to $19.71. The maker of fiber-optic communications devices forecast first-quarter earnings that missed analysts’ estimates.

Citigroup slid 1.4 percent to $47.59 for a fourth day of losses. The Justice Department asked the bank for more than $10 billion to settle a probe into its sale of mortgage-backed bonds in the run up to the 2008 financial crisis, according to a person familiar with the negotiations.

To contact the reporter on this story: Oliver Renick in New York at orenick2@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron, Jeff Sutherland

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