U.S. stocks rose this week, with the Standard & Poor’s 500 Index completing its best February since 1998, as data on housing and the jobs market improved and monthly sales from Gap Inc. to Ford Motor Co. beat estimates.
Equities trimmed their advance March 2 after the S&P 500 climbed to the highest since 2008 and the Dow Jones Industrial Average closed above 13,000 for the first time in nearly four years during the week. Consumer and financial stocks rose the most among 10 S&P 500 industries this week, each rising 1.4 percent as a group. JPMorgan Chase & Co. added 6.1 percent as an analyst said it would be worth more if broken up. Alpha Natural Resources Inc. fell 15 percent, leading a drop in energy shares.
The S&P 500 added 0.3 percent to 1,369.63, a third straight weekly gain. The benchmark measure rallied 4.1 percent last month, and has risen for eight out of nine weeks in 2012. The Dow Jones Industrial Average fell 5.38 points, or less than 0.1 percent, to 12,977.57, its first retreat in three weeks. The gauge closed at 13,005.12 on Feb. 28.
“We didn’t think the market would jump as much as it did the first six weeks, but given the positive economic numbers, it raced on up,” Thomas Nyheim, a Greenville, Delaware-based fund manager for Christiana Trust, which oversees $9.6 billion, said in a telephone interview. “The market raced up to our target on the S&P. So you might sort of flat line for months and months.”
Stocks advanced as more Americans than forecast signed contracts to buy previously owned home, jobless claims declined to a four-year low and the Conference Board’s index of consumer confidence rose to the highest level in a year. The S&P 500 fell 0.3 percent on the final day of the week amid concern that the rally that drove the benchmark gauge to the highest level since 2008 has outpaced global growth prospects.
“We suspect that any pullback or pause here should be one that refreshes,” Louise Yamada, managing director of Louise Yamada Technical Research Advisors LLC in New York, said in a Bloomberg TV interview.
The S&P 500 has risen 25 percent from its 2011 low in October amid better-than-estimated earnings and economic data. The measure trades at about 14.1 times reported earnings, compared with the average since 1954 of 16.4 times, according to data compiled by Bloomberg.
The index has the potential to reach a record high of 1,700 this year should economic growth surprise investors the same way falling bond rates did in 1995, Birinyi Associates Inc. said.
Potential for Surprise
An expansion that exceeded forecasts in the world’s largest economy would help stocks rally after economists tempered their estimate for growth in 2012 to 2.2 percent from 2.3 percent earlier in the year, according to Laszlo Birinyi, who was among the first to suggest buying stocks in March 2009. The potential for surprise is similar to 1995, when the yield on the 30-year U.S. Treasuries fell 1.93 percentage points, even as Wall Street predicted it would gain, according to a report from the Westport, Connecticut-based firm.
“In 1995, the consensus trade was higher yields, today it is tepid economic growth and the market is suggesting -- perhaps insisting -- an alternative to that consensus,” Birinyi wrote in the note dated March 1. “We continue to be bullish and would encourage a more aggressive posture.”
The S&P 500 Consumer Discretionary Index climbed 1.4 percent this week, closing near its highest level in Bloomberg data going back to 1989. Gap jumped 8.2 percent to $24.41 as the largest U.S. apparel chain said same-store sales increased 4 percent in February, beating the average projection for a 1.4 percent drop from analysts surveyed by Retail Metrics Inc.
Car companies as an S&P group advanced 2.4 percent, after U.S. auto sales accelerated at the fastest pace in four years. Ford’s deliveries jumped 14 percent to 178,644 last month, exceeding the average 9.4 increase estimated by analysts in a Bloomberg survey. Ford climbed 4 percent to $12.72. GM, which reported a surprise sales gain, added 1.5 percent to $26.45.
JPMorgan Chase rallied 6.1 percent to $40.63. The largest U.S. bank by assets should consider breaking up and selling businesses because its parts are worth one-third more than its market value, according to Mike Mayo, an analyst at CLSA Ltd. Bank of America Corp., the second-biggest U.S. lender by assets, gained 3.2 percent to $8.13.
Micron Technology Inc., the largest U.S. maker of memory semiconductors, surged 8.7 percent to $8.65 after its Japan-based rival Elpida Memory Inc. filed for bankruptcy.
Apple Inc. climbed 4.4 percent to a record $545.18 as its market capitalization topped $500 billion for the first time, cementing its lead as the world’s most valuable business and reaching heights not seen by any company since the last recession. The stock rallied for seven straight days.
Energy companies had the biggest retreat among the 10 S&P 500 industries, falling 1.7 percent. Alpha Natural, the second-largest U.S. coal producer, tumbled 15 percent to $17.40 after Moody’s Investors Service changed the outlook for the company’s credit rating to negative from stable, citing rising costs and weakening demand in the coal industry. Bigger rival Peabody Energy Corp. declined 9.5 percent to $32.89.
Apollo Group Inc. plunged 20 percent, the most in the S&P 500, to $41.86, after the owner of the University of Phoenix cut its forecasts for earnings and student enrollment.