S&P 500 Index Rises to Record Amid Mixed Data on Housing, Jobs

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El-Erian: Fed Feels U.S. Economy Is OK, Not Great

U.S. stocks advanced, with the Standard & Poor’s 500 Index rising to an all-time high, amid better-than-forecast results from Salesforce.com Inc. and Best Buy Co. while gauges on the strength of economic growth were mixed.

Best Buy and Salesforce surged 3.9 percent. Energy shares rallied with oil and Transocean Ltd. gained after reaching a settlement from BP Plc on issues related to the 2010 disaster in the Gulf of Mexico. CVS Health Corp. added 2.4 percent after saying it will acquire the nursing-home pharmacy Omnicare Inc. NetApp Inc. tumbled 10 percent after forecasting sales that missed analysts’ projections.

The S&P 500 rose 0.2 percent to 2,130.82 at 4 p.m. in New York, its fourth all-time high in the last six sessions. The Dow Jones Industrial Average added 0.34 points, or less than 0.1 percent, to 18,285.74. The Nasdaq Composite Index climbed 0.4 percent. Both the Dow and Nasdaq briefly rose above their record closing levels. About 5.7 billion shares changed hands on U.S. exchanges, 12 percent below the three-month average.

“We’re locked in this environment where we’re more trendless than trending,” said Mark Luschini, chief investment strategist in Philadelphia at Janney Capital Management LLC, which oversees about $68 billion. “There’s enough buying power to keep a bid in equity prices. We’re in this trendless, sideways trading range, maybe grinding higher but no breakout one way or the other.”

Investors are keeping a close watch on the Federal Reserve as policy makers debate the timing on their first interest rate increase since 2006. Meanwhile, the data they’re dependent on for their rate decision continues to provide mixed signals.

Uneven Data

Purchases of previously owned homes unexpectedly fell in April, a sign the industry’s recovery remains uneven. Contract closings dropped 3.3 percent, after a 6.5 percent gain in March which was the strongest in almost two years. Economists in a Bloomberg survey called for a 0.8 percent rise. Prices jumped as the number of houses for sales declined from the same time last year.

Other reports showed the index of leading economic indicators rose in April by the most in nine months, manufacturing in the Philadelphia region grew less than economists forecast in May and the four-week average for jobless claims decreased to a 15-year low.

Fed officials last month didn’t expect to raise rates at their June meeting even as they concluded that a first-quarter economic slowdown was unlikely to persist, the April minutes showed yesterday. Fed Chair Janet Yellen is due to give a speech tomorrow on the economic outlook.

Energy Gains

“Investors in the U.S. are sitting on all-time highs,” said Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich. “They’re experiencing some vertigo once in a while, looking down and asking, will it hold? The June rate hike was off the table a long time ago, but there’s some relief the Fed acknowledged this. It’s not good enough to drive markets much higher.”

The Chicago Board Options Exchange Volatility Index fell 6 percent to 12.11, the lowest level of 2015. The gauge, known as the VIX, is on track for its second straight weekly decline.

Seven of the S&P 500’s 10 main groups gained, with energy and phone company shares leading the way. Noble Corp. and Transocean rose at least 4.3 percent as oil rallied for a second day.

Bank of America Corp. analysts led by Savita Subramanian recommended in a note today that investors increase their allocations to the energy group to more than their weighting in the S&P 500, citing a better outlook for commodity prices and a likely trough in earnings revisions.

Salesforce, H-P

Financial companies slipped 0.2 percent. Insurer Aflac Inc. sank 2.8 percent after the chief executive said the company is seeking to replace Kriss Cloninger as chief financial officer by the end of June.

Best Buy climbed 3.9 percent, its best gain of the year, after posting first-quarter profit that topped analysts’ estimates after large-screen televisions and the new iPhone helped boost U.S. sales.

Salesforce rallied 3.9 percent after raising its revenue forecast as large enterprises signed up for the company’s products, underscoring its potential appeal as a takeover target.

Joining Salesforce in pacing gains in technology, Hewlett-Packard Co. climbed 2.3 percent after selling a majority stake in its Chinese server, storage and technology assets for $2.3 billion to Tsinghua University. Qualcomm Inc. advanced 1.2 percent as it began an accelerated $5 billion share buyback. Apple Inc. increased 1 percent.

Transports Bounce

CVS gained 2.4 percent, the most since December after its deal valued at $12.7 billion to acquire Omnicare, which adds services for the elderly to bolster its position as the biggest U.S. retailer of prescription drugs. Competitor Walgreens Boots Alliance Inc. increased 2.7 percent, and pharmacy benefit manager Express Scripts Holding Co. advanced 1.7 percent.

Transportation companies rebounded as railroads rallied. An airlines selloff Wednesday sent S&P 500 transports to their worst drop in two months. Kansas City Southern, Union Pacific Corp. and Norfolk Southern Corp. rose at least 1 percent Thursday.

The Dow Jones Transportation Average jumped 0.6 percent to rebound from a 2 percent rout Wednesday. The gauge has fallen 6.4 percent this year, trailing the Dow’s 2.6 percent gain.

“Transportation stocks are more reflective of how our economy is starting to show significant cracks,” said Yousef Abbasi, the global market strategist at JonesTrading Institutional Services LLC in New York. “The market making news highs while TRAN is making new lows is never a good sign.”

NetApp Sinks

NetApp Inc. slumped 10 percent, the most in three years, after quarterly earnings and revenue missed analysts’ estimates and the data management company cut its full-year forecast.

Lumber Liquidators Holdings Inc. plunged 17 percent to its lowest level in more than three years after saying Chief Executive Officer Robert Lynch will step down as the company grapples with the fallout of a report that it sold flooring with toxic levels of formaldehyde.

Real-estate companies in the S&P 500 fell for a fourth day, their longest losing streak this month. CBRE Group Inc. and Iron Mountain Inc. declined more than 1.1 percent.

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