U.S. Stocks Gain as Investors Assess Rate Timing, Greece Talks

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Reasons for Optimism and Worry in U.S. Equities: Dutta

U.S. stocks rose, with the Standard & Poor’s 500 Index near a record, as investors weighed economic data for clues on the timing of higher interest rates amid optimism that a deal on Greek aid is within reach.

AT&T Inc. rose 2.5 percent after two analyst upgrades. Green Dot Corp. jumped 40 percent after authorizing a stock buyback plan and reaching a new, five-year deal with Wal-Mart Stores Inc. Semiconductors reversed Monday’s gains as Nvidia Corp. and Qorvo Inc. fell more than 2.5 percent. Consumer staples slumped as the dollar rallied.

The S&P 500 Index climbed 0.1 percent to 2,124.20 at 4 p.m. in New York, a one-month high and 0.3 percent from its record close. The Dow Jones Industrial Average added 24.29 points, or 0.1 percent, to 18,144.07. The Nasdaq Composite Index increased 0.1 percent to an all-time high for a second day. About 5.7 billion shares traded hands on U.S. exchanges, 8.6 percent below the three-month average.

“There are quite a few cross-currents,” said Jim Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management Inc. His firm oversees $351 billion. “You’ve still got Greece in the background. There are a lot of people wondering if the S&P 500 can establish a record high and build more strength to the upside. That’s lurking more immediately, and that’s the thing most at work today.”

The S&P 500 had its biggest weekly gain since April in the period ended Friday after the Federal Reserve signaled it won’t be raising rates quickly as officials hold out for more decisive evidence of an economic rebound. Three rounds of Fed bond purchases and near-zero interest rates helped the benchmark more than triple during the six-year bull market.

Data Watch

Fed Governor Jerome Powell said today the chances are about 50-50 that the U.S. economy will improve enough for the central bank to raise interest rates in September, as the job market strengthens and signs of wage growth emerge.

A report Tuesday showed purchases of new homes increased more than forecast in May to the highest level in seven years. That added to data yesterday showing sales of previously owned homes climbed to their highest level since 2009, boosted by more first-time buyers.

A separate report today said orders for business equipment gained in May for just the second time this year. Orders for all durable goods declined 1.8 percent, reflecting a drop in the volatile aircraft category.

After talks on Monday, Greece now has 48 hours to bring a deal with its creditors to the finish line and end a five-month standoff over aid that risks default and possible exit from the euro. Greek Prime Minister Alexis Tsipras needs to shore up support at home for his plan, while euro-area finance ministers meet Wednesday to prepare the ground for a second, scheduled summit of European Union leaders Thursday.

Banks, Retailers

The Chicago Board Options Exchange Volatility Index slipped 5 percent today to 12.11, closing for a second day at its lowest level in a month. The gauge, known as the VIX, rose 1.3 percent last week.

Five of the S&P 500’s 10 main groups increased, led by phone companies, consumer discretionary and energy shares. Utilities and consumer staples fell the most.

Retailers in the benchmark index reached an all-time high. Amazon.com Inc. gained 2.2 percent to a record, while Staples Inc. rose 1.8 percent, the most since April. TJX Companies Inc. increased 1.5 percent to the highest in a month, and Urban Outfitters Inc. advanced 1.1 percent.

Financial shares climbed for a second day as the yield on 10-year Treasuries rose to a two-week high after the biggest advance in six weeks Monday. KeyCorp and JPMorgan Chase & Co. added at least 1.1 percent to pace the group. Lincoln National Corp. climbed 1.1 percent.

AT&T Rises

Energy shares erased an earlier decline, rising as West Texas Intermediate crude prices climbed above $61 a barrel. Apache Corp., Valero Energy Corp. and Tesoro Corp. gained more than 1.9 percent.

AT&T jumped 2.5 percent to its highest in almost 11 months after Barclays Plc upgraded the shares to overweight, and UBS AG raised to buy from neutral.

Green Dot soared 41 percent, the most ever, after the issuer of reloadable prepaid debit cards reached a new five-year deal with Wal-Mart and authorizing a $150 million stock buyback. Shares had fallen 25 percent this year through Monday.

Miner Freeport-McMoRan Inc. rallied 3.7 percent as copper prices rose the most in almost two months on optimism that stabilizing economies will buoy demand from Europe to China, the world’s top metals consumer.

Technology Lags

Consumer staples slumped as a Bloomberg gauge on the dollar had its best gain in more than two weeks. Philip Morris International Inc. and Altria Group Inc. lost more than 0.9 percent. Molson Coors Brewing Co. declined 2.2 percent. A stronger U.S. currency makes their products less competitive abroad, and can dent revenue when overseas sales are converted back into dollars.

Semiconductors weighed on the technology group, with Texas Instruments Inc. and KLA-Tencor Corp. down more than 1.2 percent. Hard-drive maker Western Digital Corp. retreated 3.3 percent to its lowest since October after JPMorgan Chase & Co. downgraded the shares to neutral from overweight, citing little evidence of improvement in PC demand. JPMorgan also trimmed estimates on Seagate Technology Plc, which slipped 2.9 percent.

BlackBerry Ltd. lost 4.2 percent, its biggest drop since March. The smartphone maker posted a wider-than-anticipated quarterly loss and handsets shipments at the lowest since 2007 even as the new keyboard-equipped Classic phone went on sale.

Sonic Slides

Utilities slid for a third day, losing 1.4 percent. CenterPoint Energy Inc., NiSource Inc. and PPL Corp. fell more than 1.8 percent.

Security services company ADT Corp. retreated 4.9 percent to a four-month low. Research firm Off Wall Street Consulting Group Inc. initiated coverage on the shares with a long-term sell and a $25 price target, 29 percent below the current price.

Drive-in burger chain Sonic Corp. dropped 10 percent, the most in three months, after saying it will open fewer franchised restaurants this year than it had planned.

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