July 1 (Bloomberg) -- U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding from its first monthly loss since October, as reports showing improved manufacturing from Japan to the U.S. bolstered confidence in the global economy.
Onyx Pharmaceuticals Inc. surged 51 percent after saying it is in contact with other possible bidders following its rejection of an unsolicited offer from Amgen Inc. Apple Inc. added 3.2 percent after Raymond James & Associates Inc. lifted the stock to strong buy from outperform. Pandora Media Inc. rallied 3 percent as Morgan Stanley upgraded the stock.
The S&P 500 rose 0.5 percent to 1,614.96 at 4 p.m. in New York. The benchmark index trimmed an earlier rally of as much as 1.3 percent after briefly climbing above its average for the past 50 days. The Dow Jones Industrial Average increased 65.36 points, or 0.4 percent, to 14,974.96. About 6 billion shares traded hands on U.S. exchanges today, or 9.1 percent below the three-month average.
“We’re in a period where good news is likely to be received well by the market,” John Roscoe, a senior portfolio manager who helps manage $4.5 billion at Roosevelt Investment Group Inc. in New York, said in a phone interview. “The stock market has already mostly digested the fact that rates are going to be higher. If we get confirmatory data, all else equal, it should imply better things for companies.”
The S&P 500 rallied 13 percent in the first half of the year, the best performance since a 17 percent gain in the first six months of 1998. The equity benchmark lost 1.5 percent in June, ending its longest streak of monthly gains since 2009. The gauge dropped 3.8 percent since May 21, the day before Fed Chairman Ben S. Bernanke signaled the central bank could scale back asset purchases if the economy improves in line with forecasts.
The Institute for Supply Management’s manufacturing index increased to 50.9 in June from 49 a month earlier, the Tempe, Arizona-based group said today. The median forecast of 85 economists surveyed by Bloomberg called for the measure to rise to 50.5. A reading of 50 is the dividing line between expansion and contraction. Another report from the Commerce Department showed construction spending increased 0.5 percent in May.
In Japan, the quarterly Tankan index showed positive sentiment among large manufacturers for the first time in seven quarters. The measure rose to 4 in June from minus 8 in March, the Bank of Japan said. A positive figure means that optimists outnumber pessimists. Economists had predicted a reading of 3.
Investors will watch the monthly U.S. labor report later this week for further signs of economic strength. Employers in the U.S. probably created 165,000 jobs in June, almost the same as in the prior month, according to the median forecast of 70 economists in a Bloomberg survey ahead of July 5 figures from the Labor Department. The unemployment rate probably fell to 7.5 percent, matching April’s four-year low.
Alcoa Inc. will unofficially start the second-quarter earnings season as the biggest U.S. aluminum producer becomes the first company in the Dow to report results. Profits from S&P 500 companies probably grew 2.4 percent, according to analyst estimates compiled by Bloomberg. That’s down from a projected increase of 6.2 percent at the beginning of the quarter.
“The market is beginning to think about second-quarter earnings and I think it wants to turn its attention away from the Fed-oriented things,” Michael Weiner, chief investment officer at Unified Trust Co., a wealth management firm in Lexington, Kentucky, said in a phone interview. His firm oversees more than $3 billion in assets. “I’m sensing optimism toward the second half.”
BMO Capital Markets raised its 2013 estimate for the S&P 500 to 1,650 from 1,575. Strategists led by Brian Belski said in a note to clients they had overestimated the market’s reaction to the potential reduction in Fed stimulus while “earnings growth projections are slowly improving, and macro data has been relatively upbeat lately.”
The Chicago Board Options Exchange Volatility Index, the measure of options on the S&P 500 known as the VIX, has climbed 44 percent since hitting a six-year low in March. While the gauge jumped 33 percent last quarter, its biggest gain since the three months through September 2011, bearish options remain cheap when compared with bullish ones.
Options protecting against a 10 percent slide in the S&P 500 this year cost an average 8.28 points more than calls betting on a 10 percent rally, the least since 2006, according to three-month data compiled by Bloomberg. The VIX fell 2.9 percent to 16.37 today.
Eight out of 10 S&P 500 industries rose. Industrial, raw-material and consumer-staple companies added more than 0.7 percent.
Onyx Pharmaceuticals surged 51 percent to an all-time high of $131.33. The maker of the cancer drug Nexavar has solicited interest from at least two companies since Amgen’s $120-a-share offer was reported after the market closed on June 28, according to a person familiar with the matter who asked not to be identified because the discussions were private.
Apple added 3.2 percent, the most since Feb. 05, to $409.22. Raymond James analyst Tavis McCourt lifted the iPhone maker to strong buy from outperform and reiterated a price target of $600 a share, saying the expansion of smartphone chipsets and ecosystems into automobiles, televisions and appliances is just starting and that Apple will capture the largest profit share as mobile computing moves beyond smartphones and tablets.
The maker of iPhones and iPads is seeking a trademark for “iWatch” in Japan as rival Samsung Electronics Co. readies its own wearable computing device. Apple is seeking protection for the name, according to a June 3 filing with the Japan Patent Office that was made public last week.
Pandora Media rallied 3 percent to $18.95. Morgan Stanley said it upgraded the shares to overweight, similar to a buy recommendation, saying the online music service stands to benefit as advertising shifts to digital platforms from traditional radio.
Tesla Inc. gained 9.2 percent to a record $117.18. Jefferies Group LLC analyst Elaine Kwei lifted her price target on the electric-car maker to $130 a share from $70, citing upside in second-quarter deliveries guidance.
Tribune Co. added 5.5 percent to $60. The Chicago based company agreed to buy Local TV Holdings LLC’s 19 television stations in 16 markets for $2.73 billion in cash, almost doubling the number of Tribune’s stations to 42 and further lessening its reliance on newspapers.
Cablevision Systems Corp. climbed 9.6 percent to $18.44. The cable provider may be worth at least $25 a share in a potential takeover from Time Warner Cable Inc. or Liberty Media Corp., Matthew Harrigan, an analyst with Wunderlich Securities Inc., wrote in a note.
News Corp., the owner of the Wall Street Journal and London’s Sunday Times that split from Rupert Murdoch’s media empire last week, declined 3 percent to $14.79 on the first day of trading.
21st Century Fox Inc., the entertainment division whose market value is almost eight times the size of the publishing business, climbed 2.2 percent to $29.40.
Best Buy Co. jumped 8.8 percent to $29.74. The world’s largest consumer-electronics retailer was rated outperform, or an equivalent of buy, as Credit Suisse Group AG resumed coverage of the company and forecast the stock may climb to $40 over the next 12 months.
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