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U.S. Stocks Advance Amid Optimism on Ukraine, Iraq Crises

U.S. stocks rose, giving the Standard & Poor’s 500 Index its first back-to-back gains in two weeks, on optimism that tension between Russia and Ukraine will ease and American airstrikes will push back militants in Iraq.

MannKind Corp. (MNKD) advanced 4.9 percent after Sanofi agreed to pay the drugmaker as much as $925 million for rights to the world’s only available inhaled insulin. Kinder Morgan Inc. rallied 9 percent after announcing plans to consolidate its energy businesses. Priceline Group Inc. rose 2.2 percent after reporting better-than-forecast second-quarter bookings. Dean Foods Co. (DF) fell 3.9 percent after withdrawing its full-year profit forecast amid a volatile dairy market.

The S&P 500 gained 0.3 percent to 1,936.92 at 4 p.m. in New York. The Dow Jones Industrial Average climbed 16.05 points, or 0.1 percent, to 16,569.98, trimming earlier gains of 0.5 percent. The Russell 2000 Index of small stocks rallied 0.9 percent, while the Nasdaq Composite Index added 0.7 percent. About 5.1 billion shares changed hands on U.S. exchanges, 10 percent below the three-month average.

“There is some sense that geopolitical risk out there is waning, or at least the situation is better than the belligerent talk that was coming out in middle of last week,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “We’re at lower levels than we were two weeks ago, so there’s a better entry point if you look to add stocks to your portfolio.”

Geopolitical Tensions

The S&P 500 (SPX) advanced 1.2 percent on Aug. 8 to erase declines in the previous four sessions, after reports indicated Russia intended to de-escalate the conflict in Ukraine and had ended military exercises held since Aug. 4 near its border with the country.

Ukrainian President Petro Poroshenko said today there would be an international humanitarian mission to the city of Luhansk under the auspices of the Red Cross, involving the U.S., the European Union and Russia. Earlier today, Russian Foreign Minister Sergei Lavrov said agreement had been reached with the Ukrainian government on providing aid.

In the Middle East, U.S. jets and drone aircraft hit Islamic State fighters in multiple attacks in Iraq, while Israeli and Palestinian negotiators staked out positions for a long-term agreement on the Gaza Strip amid a new Egyptian-brokered truce.

The S&P 500 had fallen 3.9 percent from its record of 1,987.98 on July 24 on concern that conflicts from Iraq to Israel and Ukraine could slow global economic growth.

Technical Analysis

The equities benchmark has gone without a 10 percent correction since 2011. It trades at 17.5 times the reported earnings of its companies, after reaching a four-year high of 18.3 in June.

U.S. equities advanced today as technical analysts said stocks will likely extend last week’s rebound. A “tradeable bounce” may be in progress, wrote Jonathan Krinsky at MKM Partners LLC in a note, citing 1,965 as a key level for the S&P 500. About 50 percent of shares in the S&P 500 are oversold, according to Katie Stockton of BTIG LLC.

The index on Aug. 7 came within 60 points of wiping out its gains for 2014 and closed below its 100-day moving average for the first time since April before rallying the following day.

The Chicago Board Options Exchange Volatility Index (VIX), which usually moves in the opposite direction to the S&P 500, tumbled 9.8 percent to 14.23 today.

Broad Gains

Seven out of 10 of the main S&P 500 groups advanced, with producers of consumer staples and information technology companies rallying at least 0.6 percent for the biggest gains.

Sysco Corp. added 3.2 percent to $37.44. The food-distribution company reported fiscal fourth-quarter revenue of $12.3 billion, topping the $12.2-billion average estimate of eight analysts compiled by Bloomberg.

Intel Corp. jumped 1.3 percent, the most in the Dow, while Micron Technology Inc. rose 2.3 percent to lead semiconductor shares higher.

MannKind advanced 4.9 percent to $8.53. Sanofi will take 65 percent of any profit or loss related to sales of the drug -- Afrezza -- while MannKind will get 35 percent, the two companies said in a statement today. Paris-based Sanofi will also advance MannKind as much as $175 million in expenses.

Kinder climbed 9 percent to $39.37, for the biggest gain in the S&P 500. The company will acquire all of Kinder Morgan Energy Partners LP, Kinder Morgan Management LLC and El Paso Pipeline Partners LP in a series of transactions valued at about $44 billion, according to a statement yesterday. Kinder Morgan Management jumped 24 percent to $95.42.

Online Travel

Priceline (PCLN) added 2.2 percent to $1,309.28 to lead a rally in discretionary shares. Bookings in the recent period rose 34 percent to $13.5 billion, the Norwalk, Connecticut-based company said today in a statement. That topped Priceline’s May projection for a 32 percent gain. Rival Expedia Inc. (EXPE) climbed 1.4 percent to $83.94. The shares earlier today reached $85.89, the highest on record.

Tesla Motors Inc. (TSLA) added 4.5 percent to $259.32 to close at a record high. Deutsche Bank AG lifted its rating on the Palo Alto, California-based electric carmaker to buy from hold.

Dean Foods lost 3.9 percent to $15.20. The largest U.S. dairy processor said it is operating in the most difficult environment in its history as it battles higher prices for raw milk.

To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net

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

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