U.S. Stocks Halt Three-Day Slide as Energy, Airlines Pace Gains

  • Jobless claims highest since July, still near four-decade lows
  • Beaten-down transportation, energy companies pace rebound

U.S. stocks rose to halt a three-day slide, as beaten-down energy shares climbed for a second session from their lowest level since September and airlines led transportation companies off a three-month low.

Weakness in energy and industrial shares has helped restrain equities from any meaningful advance since the Standard & Poor’s 500 Index reached a more than three-month high in early November. Airlines boosted industrials today, while Chevron Corp. added 1.9 percent to bolster energy after cutting its 2016 spending plans. A rally in biotechnology shares lifted the health-care group.

The S&P 500 rose 0.2 percent to 2,052.23 at 4 p.m. in New York, below its average price during the past 50 days after earlier rising as much as 1 percent. The gauge remains on track for its first weekly decline in four. The Dow Jones Industrial Average added 82.45 points, or 0.5 percent, to 17,574.75, and the Nasdaq Composite Index gained 0.4 percent. About 6.7 billion shares traded hands on U.S. exchanges, 5.2 percent below the three-month average.

“Energy has been the most volatile sector in a broader market over the last couple weeks and U.S. equities seem to be tracking it,” said Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc. “We bounced back off yesterday’s lows and today we’re right at the lows for December, and that area is holding. We’re in a waiting period here ahead of the Fed meeting.”

With the Federal Reserve’s rate-setting meeting less than a week away, the S&P 500’s performance this December is proving an exception to the historical trend for the month -- typically the strongest for global equities. An early rally fizzled yesterday as Apple Inc. paced technology-share declines, while renewed worries about the pace of global growth erased all the benchmark index’s 2015 gains.

Fed Chair Janet Yellen has recently signaled the economy is ready for higher borrowing costs. Still, investors are caught between optimism about U.S. growth and concern that a slowdown in China and the consequent tumble in commodities will damp global growth prospects. Oil prices remained at six-year lows Thursday after OPEC said crude output rose to the highest in more than three years in November.

While policy makers have emphasized a gradual pace for future interest-rate increases, investors are watching economic data to decipher how deliberate the Fed might be. A report today showed filings for unemployment benefits jumped to a five-month high, interrupting steady labor-market progress. Even with the increase, applications are holding close to four-decade lows. Separate data showed import prices in November fell less than expected.

Data Watch

Reports tomorrow on retail sales and producer prices will probably show stronger growth for November, while a gauge of consumer sentiment is expected to improve compared to last month, according to economists surveyed by Bloomberg. The data aren’t expected to alter the Fed’s anticipated move on rates, with traders pricing in a 76 percent chance that the central bank will lift off on Dec. 16.

The S&P 500 is 3.7 percent away from its all-time high set in May, after coming within 1.4 percent of the record last week. The index is heading for its strongest quarter in two years, right after its worst since 2011. Following an 8.3 percent surge in October, the S&P 500 has made little headway, going 26 sessions without back-to-back gains. The record is 28 days set back in 1970, equaled in April 1994 and again last March.

The Chicago Board Options Exchange Volatility Index fell 1.4 percent Thursday to 19.34. The measure of market turbulence known as the VIX surged 32 percent during the three previous days, the biggest such increase since the bottom of the summer selloff on Aug. 25.

Transports Rebound

The Dow Jones Transportation Average rose 0.6 percent, trimming an earlier 1.3 percent rally, after sliding yesterday to its lowest since Aug. 25. Delta Air Lines Inc., United Continental Holdings Inc. and Southwest Airlines Co. gained more than 1.6 percent. A Bloomberg index of U.S. carriers climbed 2.2 percent, rebounding from its steepest two-day drop in more than three months.

Eight of the S&P 500’s 10 main industries gained on Thursday, with health-care, energy and industrial shares performing the best, up at least 0.4 percent. Utilities lost 1.7 percent.

Consol Energy Inc. rose 10 percent, the most in more than a month to lead energy companies, while Apache Corp. and Valero Energy Corp. increased more than 2.1 percent. The strength in energy shares outweighed a decline for crude oil. The resource fell 1.1 percent to extend its five-day skid to 11 percent.

Drugmakers Mylan NV and Alexion Pharmaceuticals Inc. added at least 2.4 percent to lead health-care companies higher. The Nasdaq Biotechnology Index rose 1.2 percent, paring most of yesterday’s 1.6 percent retreat. Tenet Healthcare Corp. and Universal Health Services Inc. rose more than 1.9 percent.

Banks, Chipmakers

The KBW Bank Index closed 0.5 percent higher, after increasing as much as 1.7 percent. The gauge snapped a three-day streak of losses totaling 4.4 percent that sent it to a one-month low. KeyCorp and Regions Financial Corp. added more than 1.2 percent.

Semiconductors led an advance among technology shares, rising for the first time in four days. Micron Technology Inc., Qorvo Inc. and Avago Technologies Ltd gained at least 1.1 percent. Among other tech companies, HP Inc. and Xerox Corp. increased more than 1.5 percent.

Seritage Growth Properties, the real estate investment trust spun off from retailer Sears Holding Corp., soared 17 percent after billionaire Warren Buffett invested in the company. He reported a passive holding of 2 million shares, representing an 8 percent stake, according to a regulatory filing on Thursday.

Men’s Wearhouse Inc. plummeted 17 percent to the lowest since 2009. The company warned that its struggling Jos. A. Bank unit could force it to miss a forecast, the latest sign the merger of the two menswear chains is faltering.

Navistar International Corp. slumped 19 percent to an 18-year low. The truckmaker that counts Carl Icahn as its biggest investor dropped after Morgan Stanley cut its price target for the stock amid questions about whether the company has enough cash.

Dow Chemical Co. retreated 3.6 percent from an all-time high, after soaring 12 percent yesterday following reports that it’s in late-stage talks to merge with DuPont Co. Dow’s decline dragged raw-materials in the S&P 500 down 0.8 percent.

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