U.S. stocks rose a second week, sending the Standard & Poor’s 500 Index to a record, as better-than-forecast data on hiring and manufacturing fueled optimism in the economy and overshadowed concern on Ukraine.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. added at least 4.5 percent to lead an S&P 500 index of financial shares to a five-year high. Lorillard Inc. jumped 8 percent on speculation Reynolds American Inc. is looking to purchase the maker of Newport cigarettes. Staples Inc. and RadioShack Corp. plunged at least 15 percent after the companies said they would close some stores amid sales declines.
The S&P 500 advanced 1 percent to 1,878.04 over the five days to finish the week at an all-time high. The Dow Jones Industrial Average increased 131.01 points, or 0.8 percent, to 16,452.72.
“Any geopolitical risk involving Russia puts markets on edge, but the markets have looked through that,” Darrell Cronk, the New York-based regional chief investment officer at Wells Fargo Private Bank, which manages $170 billion, said by phone. “We got a little bit of whipsaw earlier in the week between the market falling on Ukraine news and the strong recovery back. Equity markets are telling us they see brighter days.”
The S&P 500 recorded its biggest drop in a month on March 3 on concern Russia’s military presence in Ukraine could lead to a broader conflict. The index rallied 1.5 percent to an all-time high the next day after remarks from Russian President Vladimir Putin eased the tension.
The geopolitical crisis threatened to overshadow economic reports that indicated the U.S. economy is starting to shake off the effects of severe winter weather.
U.S. employers added more workers than estimated in February, a Labor Department report showed. The pickup in the pace of hiring followed the weakest two-month gain in more than a year. The jobless rate rose to 6.7 percent from 6.6 percent as more people joined the workforce.
Other reports indicated manufacturing expanded faster than projected last month, while consumer spending rose more than estimated in January. The Federal Reserve said in its Beige Book business survey that the economy in most regions grew last month even as harsh winter weather impeded hiring.
The S&P 500 rallied 4.3 percent in February after Fed Chair Janet Yellen said the economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases. Three rounds of Fed stimulus have helped push the S&P 500 up 178 percent from a 12-year low, as U.S. equities are set to enter the sixth year of a bull market that started March 9, 2009.
The equities benchmark was little changed over the final three sessions of the week as investors watched developments in Ukraine. The country, a key transit nation for east-west energy supplies, is struggling to keep hold of Crimea after pro-Russian forces seized control of the peninsula. The West has urged Russia to pull back, and began to impose sanctions.
“Ukraine was a very big deal and created a ton of market volatility and had a huge impact on the stock market,” Richard Slinn, a San Francisco-based investment specialist at JPMorgan Private Bank, which oversees $977 billion, said by phone. “We’re watching that closely, but you can’t manage portfolios on geopolitical issues.”
The Ukraine conflict sent the Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, surging 14 percent on March 3. The VIX tumbled 12 percent the next day as the S&P 500 closed at a record. The index was little changed the rest of the week to finish 0.8 percent higher.
Nine of 10 main S&P 500 groups advanced this week. Financial stocks paced the gains, rallying 3 percent to the highest since September 2008. JPMorgan Chase jumped 4.5 percent to $59.40. Goldman Sachs climbed 4.7 percent to $174.26 for the biggest gain in the Dow.
Berkshire Hathaway Inc.’s Class B shares surged 6 percent to $122.67, the biggest weekly advance in 14 months. Chairman Warren Buffett told investors in a letter that the true value of his company has been rising faster than accounting metrics suggest. Berkshire’s market value topped $300 billion for the first time.
Lorillard climbed 8 percent to $52.99 amid speculation that Camel maker Reynolds American will bid for the $19 billion company. Neither confirmed deal talks. Stifel Financial Corp. said Lorillard’s growing Newport brand would help Reynolds with its declining market share. Reynolds rose 5.4 percent to $53.55. Both stocks touched records earlier in the week.
Valero Energy Corp., an oil refiner, soared 10 percent to $52.99 for the biggest gain in the S&P 500. Marathon Petroleum Corp., another refiner, jumped 7.1 percent to $90.
Staples tumbled 16 percent to $11.48. The largest U.S. office-supplies chain announced it will close as many as 12 percent of its North American stores and cut as much as $500 million in costs as online competition continues to hurt sales.
RadioShack plunged 20 percent to $2.15. The electronics retailer reported its worst quarterly sales drop in 15 years and said it will shut as many as 1,100 underperforming stores.
Exxon Mobil Corp. slipped 1.3 percent to $94.99 for the worst performance in the Dow. Exxon’s biggest international exploration opportunity in the Russian Arctic may be imperiled if Russia is slapped with sanctions by western governments or the United Nations for its intervention in the Crimea.