S&P 500 Advances in Shortened Week Ahead of Elections
The Standard & Poor’s 500 Index rose in a three-day trading week, as the market reopened after Hurricane Sandy caused the longest weather-related shutdown since 1888, and American voters prepared to choose a president.
Equities retreated on the last day of the week as a better- than-forecast payrolls report failed to keep technology and commodity shares from slumping. Visa Inc. (V) and General Motors Co. (GM) climbed at least 3.6 percent as earnings beat projections. Macy’s Inc. rallied 5.5 percent after raising its sales forecast. Apple Inc. (AAPL) sank 4.5 percent, capping a sixth weekly decline, the longest losing streak since October 2008.
The S&P 500 rose 0.2 percent to 1,414.20 for the week. The Dow Jones Industrial Average slid 14.05 points, or 0.1 percent, to 13,093.16. The equity market was closed Oct. 29 and 30.
“You have the hurricane, the election, the employment report and the earnings numbers all impacting the market,” David Sowerby, a fund manager at Boston-based Loomis Sayles & Co., said in a telephone interview. His firm oversees about $175 billion. “Earnings continue to surprise on the upside. We’ve had a slight improvement in manufacturing. That’s favorable for stocks.”
The S&P 500 gained as 71 percent of companies that released quarterly results have beaten analysts’ estimates, according to data compiled by Bloomberg. Reports showing better-than-forecast manufacturing data and a surge in consumer confidence gave benchmark indexes their biggest gains in seven weeks on Nov. 1. Hiring in the U.S. increased more than forecast in October as employers looked past slowing global growth and political gridlock at home.
The employment data was the last before the Nov. 6 election, as voters decide between giving President Barack Obama another four years in office or changing course with Republican challenger Mitt Romney.
“The jobs report was a very solid, positive report,” Darrell Cronk, the New York-based regional chief investment officer at Wells Fargo Private Bank, which oversees $169 billion, said in a telephone interview. “The business community is showing some moderation in their hiring and a little tepid with their concern of Hurricane Sandy and the election. But the consumer through stronger data is showing us that they’re willing to jump back in and seek out a job.”
Stocks have on average rallied 3 percent in the two months following Election Day after a tight race, according to Thomas J. Lee, the chief U.S. equity strategist at JPMorgan Chase & Co., who cited historical data from the last five elections with close contests. The equity market gains even more if the challenger wins, he said.
The S&P 500 climbed 15 percent from a June low to a four- year high on Sept. 14 as central banks around the world stepped up stimulus to boost the economy. The benchmark gauge for American equities has surged 12 percent this year.
Companies which are most-tied to the pace of the economy, including industrial, consumer discretionary and financial shares, had the biggest gains among 10 S&P 500 groups for the week. The Morgan Stanley Cyclical Index rallied 2.4 percent.
Visa jumped 3.7 percent to $143.40. The world’s biggest payments network posted a fiscal fourth-quarter profit that beat analysts’ estimates as the company reversed $627 million in previously recorded tax reserves.
GM surged 11 percent to $25.79. The largest U.S. automaker reported third-quarter profit that surpassed analysts’ estimates by more than 50 percent and said it wants to break even in Europe by mid-decade.
Ford Motor Co. (F) advanced 7.8 percent to $11.17. The second- largest U.S. automaker reported its 14th consecutive profitable quarter as its North America unit delivered record earnings that made up for higher taxes and losses in Europe.
Macy’s (M) gained 5.5 percent to $40.61. The second-biggest U.S. department-store chain said comparable-store sales in the second half of the year will gain about 4 percent, up from a previous estimate of about 3.7 percent.
Genworth Financial Inc. (GNW) climbed 11 percent to $6.06. The insurer beat third-quarter estimates and posted a narrower loss at the unit backing home loans. Acting Chief Executive Officer Martin Klein said the company plans to sell businesses to raise funds that can be used to cut debt and buy back shares.
Netflix Inc. (NFLX) surged 11 percent to $76.90. Billionaire Carl Icahn acquired almost a 10 percent stake in the operator of the largest online video streaming service, and is considering ways to maximize value.
Apple tumbled 4.5 percent to $576.80 after Chief Executive Officer Tim Cook embarked on a sweeping management overhaul at the world’s most valuable company. The shares have tumbled 18 percent since Sept. 19, trimming this year’s advance to 42 percent.
Pfizer Inc. (PFE) slumped 3.5 percent to $24.55. The world’s biggest drugmaker narrowed its 2012 forecast after reporting third-quarter earnings that met analyst estimates and sales that fell short of expectations. The company also said it was buying back as much as $10 billion in shares.
Western Union Co. (WU) plunged 33 percent to $11.95. The world’s biggest money-transfer business cut its profit forecast for 2013.
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