U.S. stocks rose, paring a weekly drop for the Standard & Poor’s 500 Index, as equities reversed losses in the final hour of trading amid Russell Investments’ annual revisions to its benchmark indexes.
Nike Inc. (NKE) added 1.1 percent after the largest sporting-goods maker posted profit that beat analysts’ estimates. GoPro Inc. (GPRO) rallied for a second day after going public. DuPont fell 3.3 percent after the maker of genetically-modified corn trimmed its profit estimate as farmers switched to soybeans. Dollar General Corp. sank 7.3 percent after the company’s chief executive said he would retire.
The S&P 500 increased 0.2 percent to 1,960.96 at 4 p.m. in New York after losing 0.3 percent earlier. The benchmark index has advanced 4.7 percent this quarter, its sixth straight gain for the longest winning streak since 1998. The Dow Jones Industrial Average rose 5.71 points, or less than 0.1 percent, to 16,851.84 today following an earlier drop of as much as 72 points. The Russell 2000 (RTY) Index of smaller stocks increased 0.7 percent on trading volume 161 percent higher than the 30-day average.
“Due to the sharp increase in market share of exchange-traded funds and large number of active managers that are closet indexers, it will most likely have an impact as the herd panics to get into new index names,” Eric Cinnamond, Louisville, Kentucky-based manager of the $798 million Aston/River Road Independent Value Fund, said of the index revisions in an email.
About 8.9 billion shares changed hands in the U.S. today, the third-busiest session of the year. Russell’s U.S. stock indexes, including the Russell 1000 Index and the Russell 2000, are used as benchmarks for $5.2 trillion in assets, according to the company’s website.
With the end of the quarter, investors should expect about $20 billion in selling of equities and some buying of bonds as pension fund managers rebalance their portfolios, Boris Rjavinski, a strategist at UBS AG, estimated in a June 23 report.
The S&P 500 trades at 16.6 times the projected earnings of its members, close to its highest valuation in four years. The index has failed to post a gain or loss exceeding 1 percent for 50 straight days, the longest stretch since 1995.
The Thomson Reuters/University of Michigan’s final June index of consumer sentiment rose to 82.5 from 81.9 a month earlier. The median projection in a Bloomberg survey of 57 economists called for 82 after a preliminary June reading of 81.2.
“The consumer sentiment numbers support indicators pointing to a continued rebound, whether it’s employment numbers, stock prices or home values,” Jim Dunigan, Philadelphia-based chief investment officer at PNC Bank, said in a phone interview.
Technology, utility and industrial companies led gains in seven of the 10 main industry groups in the S&P 500. (SPX) An S&P index of raw-material producers lost 0.4 percent, the most among the 10 main groups.
Shares of utilities gained for a fourth straight day. Utility stocks in the S&P 500 have climbed 15 percent since the beginning of the year as electricity providers have attracted almost $50 billion in takeover offers this quarter. PPL Corporation gained 1.2 percent to $35.19 today, the highest since October 2008.
DuPont lost 3.3 percent to $65.44, the biggest loss since October 2012, after the company said it expects its full-year operating earnings of between $4 and $4.10 per share, compared with an earlier forecast of $4.20 to $4.45.
Nike climbed 1.1 percent to $77.68, the highest level since March 20. Running and basketball gear drove sales in North America and the company is benefiting from consumers increasingly buying athletic apparel and gear for everyday wear, not just when working out or playing sports.
GoPro, the developer of mountable camera gear, climbed 14 percent to $35.76 in its second day of trading on the Nasdaq.
Keurig Green Mountain Inc. added 4.1 percent to $125.25. The maker of single-cup coffee brewing systems was raised to “buy” from “hold” by Argus Research Corp. analyst John Staszak.
Dollar General fell 7.3 percent to $57.19, the biggest loss in a year. The discount retail store operator’s Chairman and Chief Executive Officer Rick Dreiling, 60, informed the board of his intent to retire as CEO effective May 30, 2015. He plans to remain as chairman during a transition period.
Family Dollar Stores Inc. slid 1.7 percent to $66.84, the biggest decline since June 11.
The S&P 500 has lost 0.1 percent this week, paring its gain in June to 1.9 percent. Stocks retreated yesterday as James Bullard, president of the Federal Reserve Bank of St. Louis, suggested that higher interest rates may occur in the first quarter of next year. Investors shrugged off data this week showing U.S. gross domestic product shrank 2.9 percent in the first quarter, the worst reading since 2009.
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