U.S. stocks rose, with the Standard & Poor’s 500 Index halting a three-day drop, as Chinese trade data topped estimates and jobless claims fell to the lowest monthly rate since before the recession.
Cliffs Natural Resources Inc. and Newmont Mining Corp. gained at least 8.7 percent as metals prices rallied. Tesla Motors Inc. surged 14 percent after reporting second-quarter results that surpassed analysts’ estimates. AT&T Inc. slid 0.8 percent as phone stocks fell the most in the benchmark index. JPMorgan Chase & Co. dropped 0.9 percent after saying it’s under federal criminal investigation for practices tied to sales of mortgage-backed bonds.
The S&P 500 climbed 0.4 percent to 1,697.48 at 4 p.m. in New York, paring the index’s weekly drop to 0.7 percent. The Dow Jones Industrial Average gained 27.65 points, or 0.2 percent, to 15,498.32. About 5.9 billion shares changed hands on U.S. exchanges, 6.9 percent below the three-month average.
“It shows that the data is moving in the right direction, so at the end of the day that is a positive catalyst for stocks,” Anastasia Amoroso, Global Market Strategist at JPMorgan Funds, which oversees about $400 billion, said in a phone interview. “There could be some short-term volatility around how that impacts Fed policy. One thing to keep in mind is if the Fed does actually reduce the pace of purchases, that is for some very good reasons.”
The S&P 500 declined 1.1 percent the first three days of the week amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens. Fed Bank of Cleveland President Sandra Pianalto said yesterday there had been “meaningful improvement” in the labor market and a scaling back of stimulus may be warranted if it continues.
Fed Bank of Dallas President Richard Fisher told Germany’s Handelsblatt newspaper in an interview today that the central bank should start reducing bond purchases in September if “economic data doesn’t significantly deteriorate.” Fisher, one of the most vocal critics of quantitative easing, said on Aug. 5 the Fed is closer to slowing its stimulus.
Data today showed claims for U.S. unemployment benefits in the four weeks ended Aug. 3 declined to 335,500 on average, the least since November 2007. They rose to 333,000 last week, in line with the median forecast of 50 economists surveyed by Bloomberg, from 328,000 the prior week.
A separate report showed consumers last week were the most upbeat in more than five years. The Bloomberg Consumer Comfort Index rose to minus 23.5 for the period ended Aug. 4, its strongest reading since January 2008.
In Asia, data indicated China’s exports and imports exceeded economists’ forecasts, adding to signs that the world’s second-largest economy is stabilizing following a two-quarter slowdown. Improved trade may bolster Premier Li Keqiang’s chances of achieving the year’s 7.5 percent target for expansion, after official manufacturing and service-industry indexes rose in July.
The trade data “could be a sign that we see some stabilization in Chinese activity,” said Patrick Moonen, who helps oversee $244 billion as senior strategist at ING Investment Management in The Hague. “I don’t think the U.S. equity market is only a matter of monetary policy. As the economy recovers, the earnings backdrop will become the most important element.”
The S&P 500 has rallied 19 percent this year and closed at a record 1,709.67 on Aug. 2. The gauge topped 1,700 for the first time on Aug. 1, after climbing within two points of that level for three times in the week before only to retreat by the close of trading. It briefly rose above 1,700 twice today before slipping back below.
Stocks have also advanced this year as corporate earnings have surpassed estimates. Of the 445 companies in the S&P 500 to have reported quarterly results this period, 72 percent have exceeded analysts’ profit estimates and 56 percent have beaten sales projections, data compiled by Bloomberg show.
The Chicago Board Options Exchange Volatility Index, or VIX, fell 1.9 percent today to 12.73. The equity volatility gauge reached its 2013 peak in June and has since dropped 38 percent.
Nine of 10 industries in the the benchmark gauge advanced. Materials stocks rallied 1.5 percent to pace gains, boosted by the data from China, which is the largest consumer of raw-materials.
Cliffs Natural Resources, a diversified miner, jumped 8.9 percent to $22.01. Newmont Mining rallied 8.7 percent to $28.78, snapping a six-day losing streak, as copper rose to an eight-week high and gold added the most in two weeks.
Tesla, the electric-car company led by Elon Musk, soared 14 percent to a record $153.48. The carmaker’s results surpassed analysts’ estimates on a surge in Model S sedan deliveries. The company also said it will make money all year on an operating basis, even as it expands to Europe and Asia.
Groupon Inc. rallied 22 percent to $10.60, the biggest jump since December. The operator of the largest daily-deals website’s second-quarter net loss was narrower than analysts forecast. The company also named co-founder Eric Lefkofsky as CEO to lead turnaround plans.
Consumer discretionary shares climbed 0.7 percent as a group. L Brands Inc., which operates Victoria’s Secret, gained 5.2 percent to $60.25 after reporting same-store sales in July rose more than analysts estimated.
J.C. Penney Co. jumped 6.7 percent to $13.66. The department-store chain seeking to rebound from its worst sales year in more than two decades gained for the first time since July 29 after CNBC said the retailer is searching for a new chief executive officer. The stock had lost 23 percent in the seven sessions through yesterday.
Microsoft Corp. rose 2.6 percent to $32.89 for the biggest gain in the Dow. The maker of the Windows operating system was raised to overweight from equalweight by Evercore Partners. Analyst Kirk Materne said in a note the company has an attractive valuation and may increase its dividend in September.
Phone stocks tumbled 1 percent to pace declines in the S&P 500. AT&T dropped 0.8 percent to $35.29 and Verizon Communications Inc. lost 0.6 percent to $49.62.
CenturyLink Inc. fell 5.6 percent to $34.36 for the biggest drop in the S&P 500. The telecommunications company cut its sales forecast, citing slower acceleration in data-hosting revenue and a faster rate of decline in low bandwidth data services.
JPMorgan Chase declined 0.9 percent to $54.83 for the biggest slide in the Dow and a fifth straight losing session. The biggest U.S. bank said the Justice Department’s civil division found in May that the bond-sales practices broke civil laws after it examined securities tied to subprime and Alt-A loans sold to investors from 2005 through 2007.