Rally in Apple, Bank Shares Sends U.S. Stocks to All-Time Highs

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U.S. stocks rose to all-time highs as Apple Inc. climbed on comments from Carl Icahn and banks rallied amid higher bond yields.

Apple gained 1.1 percent after Icahn called for the company to boost its stock buyback. Citigroup Inc. and SunTrust Banks Inc. added more than 0.8 percent. Ann Inc. jumped 20 percent after Ascena Retail Group Inc. agreed to buy the women’s apparel retailer for about $2.2 billion. Altera Corp. rallied 5.7 percent after a report said it has resumed talks with Intel Corp. about a potential buyout.

The Standard & Poor’s 500 Index climbed 0.3 percent to 2,129.2 at 4 p.m. in New York, closing at a record for the third consecutive session. The Dow Jones Industrial Average added 26.32 points, or 0.1 percent, to 18,298.88, also an all-time high and its first since March 2. The Nasdaq Composite Index increased 0.6 percent. About 5.4 billion shares changed hands on U.S. exchanges, 16 percent below the three-month average.

“Financials are starting to pick up with the yield curve,” said Walter Todd, who oversees about $1 billion as chief investment officer for Greenwood, South Carolina-based Greenwood Capital. “It could take you another leg higher in this market if financials start to participate.”

The back-to-back weekly advance Friday halted a string of five up-and-down periods for the S&P 500, as multinational companies rallied amid a weaker dollar and mixed economic data boosted speculation the Federal Reserve won’t rush to raise interest rates. With a selloff in global bond markets subsiding last week, a measure of U.S. stock volatility posted its longest streak of losses in three weeks and closed near this year’s low.

Dollar Gains

The dollar climbed from a four-month low and Treasury yields rose Monday on speculation reports this week will bolster the case for a Fed rate increase. A stronger dollar adds to the drag on the economy and corporate profits as exports become less competitive and imports more attractive to consumers.

Investors will seek clues on the strength of the economic recovery from housing reports later this week, to gauge the timing of a rate increase. A report Monday showed confidence among U.S. homebuilders unexpectedly fell in May, reflecting cooling sales and slower buyer traffic.

Fed’s Evans

“It’s difficult to be too bullish, but it’s also difficult to build a bearish case,” Allan von Mehren, chief analyst at Danske Bank A/S, said by phone from Copenhagen. “The macro picture is not that great but it’s not a disaster quite yet. We need to see some better growth figures.”

Fed Bank of Chicago President Charles Evans repeated his call to hold interest rates near zero until early 2016 at a speech in Stockholm on Monday. Evans, who votes on monetary policy this year, said borrowing costs should rise gradually thereafter because inflation is still well below the Fed’s goal. The Fed releases the minutes of its April meeting on May 20.

Wal-Mart Stores Inc. and Hewlett-Packard Co. are among the S&P 500 companies reporting results this week, as the earnings season draws to a close. Most members on the index have already reported results, with 72 percent beating profit estimates while 47 percent have exceeded revenue forecasts.

Banks Rally

The Chicago Board Options Exchange Volatility Index rose 2.8 percent to 12.73. The gauge, know as the VIX, fell 3.7 percent last week for its first weekly decline in three weeks.

Seven of the S&P 500’s 10 main groups increased, led by financial and health-care companies. Financial shares in the benchmark gained amid a jump in the 10-year Treasury’s yield.|

E*Trade Financial Corp. and Regions Financial Corp. rose at least 2.3 percent as their profits benefit from higher interest rates. Citigroup advanced 0.8 percent to a 2015 high, while JPMorgan Chase & Co. closed at a record. The KBW Bank Index closed at its highest level since Sept. 2008.

Johnson & Johnson climbed 1.1 percent to a four-month high, and Gilead Sciences Inc. added 1.6 percent to its highest since October to pace an increase in the health-care group. The Nasdaq Biotechnology Index rose 1.2 percent to a three-week high.

Altera rallied 5.7 percent to its highest since July 2011, leading chipmakers to a fourth day of gains after the New York Post reported that talks resumed about a possible buyout by Intel. Intel advanced 1.3 percent.

Materials Retreat

Raw-materials companies in the benchmark slumped as the dollar increased, reducing the appeal of commodities priced in the U.S. currency. Freeport-McMoRan Inc. and Alcoa Inc. fell more than 1 percent. The dollar’s move also weighed on consumer staples. Altria Group Inc. and Oreo cookie maker Mondelez International Inc., which generates about 80 percent of its revenue outside North America, lost at least 1.1 percent.

Keurig Green Mountain Inc. sank 4.1 percent, the most among consumer staples in the S&P 500, to its lowest level in 15 months. The decline added to an 8.6 percent retreat Friday after the company said its new cold brewing system won’t be available in all its retail outlets until next year.

Energy stocks declined as Transocean Ltd. and Range Resources Corp. lost more than 2.2 percent. Brent crude oil will trade at $55 a barrel in five years according to Goldman Sachs Group Inc., more than $10 lower than current prices and a discount of $20 to 2020 futures.

Chevron, Endo

Chevron Corp. fell 1.3 percent to a one-month low and was the worst performer among Dow components, after Goldman Sachs downgraded the shares to sell from neutral.

Yelp Inc. decreased 0.7 percent after Piper Jaffray Cos. analyst Gene Munster downgraded the shares to neutral from overweight, citing a 65 percent chance the consumer-review website eventually gets acquired at a valuation at or slightly below its current share price.

Endo International Plc slipped 5.4 percent to a three-month low after agreeing to buy Par Pharmaceutical Holdings Inc. in a deal valued at $8.05 billion.

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