Most U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a third day, as optimism about Greece’s attempts to form a coalition government tempered concern about a surge in Spanish bond yields.
Apple Inc., the world’s most valuable company, added 2 percent to pace gains in technology shares. D.R. Horton Inc. and Lennar Corp. climbed at least 3.9 percent as confidence among homebuilders rose to a five-year high. Facebook Inc. rallied 4.7 percent in the one-month anniversary of its initial public offering. Energy and financial shares in the S&P 500 declined.
Ten stocks gained for every nine falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 rose 0.1 percent to 1,344.78, after dropping 0.6 percent. The Dow Jones Industrial Average lost 25.35 points, or 0.2 percent, to 12,741.82. The Nasdaq Composite Index added 0.8 percent to 2,895.33. Trading volume for exchange-listed stocks in the U.S. was about 5.8 billion shares, 13 percent below the three-month average.
“We managed not to drive off the cliff in Greece, but we still got flat tires,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “The challenges in Spain are very much in front of us. There’s not a lot of conviction.”
Equities rebounded as Antonis Samaras, leader of Greece’s New Democracy party, said he had a constructive discussion with Democratic Left leader Fotis Kouvelis. German Chancellor Angela Merkel’s said Greece shouldn’t be granted leeway on terms for its bailout. Group of 20 chiefs began a two-day meeting as Spain’s borrowing costs soared to a euro-era record. Policy makers are discussing ways to stimulate the economy if necessary, a Canadian official said.
Federal Reserve policy makers meet June 19-20 to discuss whether more U.S. stimulus is need. The National Association of Home Builders/Wells Fargo confidence index rose to 29, the highest since May 2007, from a revised 28 in May that was lower than first estimated, a report from the Washington-based group showed today. The gauge exceeded the median estimate of 28 in a Bloomberg News survey.
“It’s somewhat tenuous at this juncture,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “With the G-20 meeting going on and the Fed policy meeting this week, investors are somewhat hesitant.”
Concern about a global slowdown and a worsening of Europe’s debt crisis put the S&P 500 on the brink of a so-called correction this month. It fell 9.9 percent from an almost four-year high in April through June 1. Since then, the lowest valuation in six months and bets on global policy action drove the measure up 5.2 percent.
Eight out of 10 groups in the S&P 500 rose as consumer discretionary and technology shares had the biggest gains. Apple jumped 2 percent to $585.78. A measure of homebuilders in S&P indexes gained 3.5 percent. D.R. Horton increased 3.9 percent to $16.50. Lennar climbed 4.1 percent to $26.97.
The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against S&P 500 losses, tumbled 13 percent to 18.32, the lowest since May 3.
Facebook, which last week had the first weekly advance since its initial public offering, rose 4.7 percent to $31.41. The shares have jumped 15 percent in three days.
Groupon Inc. rallied 11 percent to $11.15. The largest daily coupon website advanced after Morgan Stanley analysts upgraded the stock to overweight from equalweight, citing international sales opportunities.
EBay Inc. rallied 4.5 percent to $42.49. The world’s largest Internet marketplace was rated outperform in new coverage at Keefe, Bruyette & Woods Inc.
Solar manufacturers led by LDK Solar Co. and First Solar Inc. rallied as Japan approved subsidies that will encourage at least $9.6 billion in new installations in the country. U.S. shares of Xinyu, China-based LDK climbed 1.8 percent to $2.21. Tempe, Arizona-based First Solar, the world’s largest maker of thin-film panels, gained 3.7 percent to $14.47.
A measure of energy shares in the S&P 500 fell 0.8 percent, the most among 10 groups, as oil slumped amid a stronger U.S. dollar. Halliburton Co., the world’s largest provider of hydraulic-fracturing services, declined 1.7 percent to $28.96. Morgan Stanley, owner of the world’s largest brokerage, slumped 3.4 percent to $13.82 to pace losses in financial companies.
SAIC Inc. declined 3.1 percent to $11.86 after losing its largest government contract to Lockheed Martin Corp. Bethesda, Maryland-based Lockheed on June 15 beat SAIC for a $1.91 billion, seven-year Defense Department contract to operate a communications network known as the Global Information Grid.
Body Central Corp. plunged 49 percent to $8.22, the lowest ever. The operator of almost 250 women’s clothing stores cut its second-quarter profit forecast amid declining sales at established stores.
DSW Inc. slumped 11 percent to $52.13 after the shoe retailer’s second-quarter profit forecast trailed estimates.
The largest U.S. companies are beating the average stock in the S&P 500 by the most in more than a decade, fueled by rising dividends, valuations 31 percent below the historical average and fear.
Companies in the S&P 100 from Apple to Bank of America Corp. have gained 7.7 percent in 2012, compared with 5.1 percent for a version of the S&P 500 that strips out weightings for market value, the widest margin since 1999, data compiled by Bloomberg show. With price-earnings ratios down 6.6 percent this quarter to 12.7 and payouts at 2.2 percent of share prices, analysts raised buy recommendations for the group to the highest level since 2007.
The biggest stocks are showing corporate America’s resilience even though Mitt Romney, the presumptive Republican candidate in this year’s national election, criticized President Barack Obama earlier this month for saying the private sector is “doing fine.” A second year of record profits is helping the S&P 100 beat every developed market index in the world as investors seek the relative safety of the U.S. after $5.1 trillion was erased from global equities since March 27.
“The mega-caps are just cheap compared to other segments of the stock market,” Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., said in a June 14 phone interview. His firm oversees $3.68 trillion. “There are a lot of things that are wrong in the economy, to state the obvious, and these are companies that have the wherewithal to survive.”