Nov. 3 (Bloomberg) -- U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a second straight day, as Greece moved closer to accepting a bailout and the European Central Bank unexpectedly lowered interest rates.
Qualcomm Inc. jumped 7.5 percent as the biggest maker of mobile-phone chips forecast sales that beat analysts’ projections. Kraft Foods Inc. added 3.3 percent after raising its earnings estimate. Estee Lauder Cos. jumped 18 percent after the maker of Clinique skin care raised its profit forecast, boosted its dividend and set plans for a stock split.
The S&P 500 climbed 1.9 percent to 1,261.15 at 4 p.m. in New York, extending its two-day gain to 3.5 percent and erasing its 2011 decline. The Dow Jones Industrial Average increased 208.43 points, or 1.8 percent, to 12,044.47 today.
“They’re pushing the Greeks to the wall,” Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, which oversees $14.5 billion of assets, said in a telephone interview. “It’s a sobering up moment. On top of that, the ECB’s decision to cut rates will take some of the pressure off of the upcoming financing for the Spanish and Italian markets.”
Stocks tumbled earlier this week as Greek Prime Minister George Papandreou announced on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on the rescue pact. A two-day slump sent the S&P 500 to the level where three rallies stopped in August and September, the top of a price range that prevailed for 10 weeks. The index rose above that level last week amid progress on Europe’s bailout plans.
Greek Finance Minister Evangelos Venizelos, speaking to party lawmakers in Parliament in Athens today, said the nation won’t hold a referendum. Just hours after saying Greeks need to decide on whether their future is in the euro, Papandreou said the country belongs in the currency bloc.
“Papandreou absolutely blinked in this game of chicken,” Michael Holland, chairman and founder of New York-based Holland & Co., said in a telephone interview. His firm oversees more than $4 billion. “The interesting thing is that it took him so long to blink. The world’s markets told him he was wrong and he still persisted for an extended period of time. It was insane.”
Global stocks also rose as ECB officials unanimously lowered the benchmark interest rate by 25 basis points to 1.25 percent, confounding 51 of 55 economists in a Bloomberg News survey. ECB President Mario Draghi said the rate cut happened partly because “what we’re observing now is slow growth heading toward a mild recession.”
Earlier today, benchmark gauges erased a rally as a report showed that service industries in the U.S. expanded at a slower pace and consumer confidence plunged, supporting Federal Reserve Chairman Ben S. Bernanke’s forecast yesterday that the economic recovery will be “frustratingly slow.”
A Labor Department report today showed first-time claims for unemployment benefits declined last week to a one-month low of 397,000. Employment probably cooled in October, indicating the U.S. recovery remains too weak, economists said before a report tomorrow. Payrolls climbed by 95,000 workers after a 103,000 September increase, according to the median forecast of economists surveyed by Bloomberg News.
All 10 groups in the S&P 500 rallied as energy and industrial shares had the biggest gains, adding at least 2.4 percent. Gauges of utility, health care and consumer staples companies advanced less than the benchmark gauge.
Optimism about corporate earnings also helped send stocks higher. About three quarters of the S&P 500 companies that reported results since Oct. 11 beat analysts’ projections, according to data compiled by Bloomberg.
Qualcomm jumped 7.5 percent to $56.11. The company, which gets most of its profit from licenses on technology used in so-called 3G phones, is benefiting as more consumers switch to the technology -- especially in developing countries.
Kraft added 3.3 percent to $35.78. Food companies such as Kraft, Sara Lee Corp. and General Mills Inc. have raised prices on many products this year to make up for higher costs for ingredients such as corn, coffee and sugar.
Estee Lauder jumped 18 percent, the biggest advance in the S&P 500, to $118.92. The company said it will split its common stock 2-for-1 in January, and raise the annual dividend to $1.05 a share. Sales in the fiscal first quarter gained 18 percent, helped by stronger demand in all of the company’s markets and a weaker U.S. dollar that aided results overseas.
DirecTV climbed 6.2 percent to $47.63. The largest U.S. satellite-television provider reported a 7.7 percent increase in third-quarter profit after a football promotion helped it gain U.S. subscribers.
Jefferies Group Inc. lost 2.1 percent to $12.01, paring an earlier decline as it said it has no “meaningful net exposure” to European sovereign debt. Its shares plunged as much as 20 percent, triggering stock-market circuit breakers. Egan-Jones Ratings Co. cut the firm’s credit grade, citing a “changed environment” after the collapse of MF Global Holdings Ltd. and concern that Jefferies’s $2.7 billion in “sovereign obligations” on Aug. 31 is large relative to equity.
Abercrombie & Fitch Co. tumbled 20 percent, the most in the S&P 500, to $59.26. The New Albany, Ohio-based teen-clothing retailer reported a slowing trend for same-store sales in Europe, including flagship stores that had declines. Japan and Canada same-store sales also dropped.
The S&P 500 is caught in a “battle” between technical measures sending conflicting signals on whether stocks will rise or fall, Janney Montgomery Scott LLC said.
The biggest monthly rally since 1991 failed to keep the benchmark measure of U.S. equities above its 200-day average, according to data compiled by Bloomberg. At the same time, its 50-day average began rising for the first time since June. The index closed at 1,237.90 yesterday, 2.8 percent below its 200-day level and 3.8 percent above the 50-day figure.
The charts “underscore the battle we’re seeing between the market’s longer-term declining moving averages and its short-term rising moving averages,” Dan Wantrobski, the Philadelphia-based director of technical research at Janney, wrote in a report yesterday. “Due to the close proximity the price action of each benchmark now shares with these indicators, we will likely have an answer soon.”
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