U.S. Stocks Rise as Economy Expands, Syria Concerns Ease
Verizon Communications Inc. added 2.7 percent as Vodafone Group Plc said the companies are in talks over their Verizon Wireless venture. Guess? Inc. (GES) rallied 13 percent after the apparel maker reported second-quarter profit that exceeded analysts’ estimates. Exxon Mobil Corp. lost 1.8 percent as oil futures fell from a two-year high.
The S&P 500 rose 0.2 percent to 1,638.17 at 4 p.m. in New York, paring an earlier advance of as much as 0.7 percent. The Dow Jones Industrial Average gained 16.44 points, or 0.1 percent, to 14,840.95.
“That’s just one confirmation that the data is continuing to move in the right direction,” Anastasia Amoroso, global market strategist at J.P. Morgan Funds, which oversees about $400 billion, said in a phone interview. “That gives more evidence why the Fed should ultimately taper. But over the last couple of months the markets have been a lot more comfortable with that notion.”
Gross domestic product rose at a 2.5 percent annualized rate, up from an initial estimate of 1.7 percent, Commerce Department figures showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg projected a 2.2 percent gain.
Jobless claims in the week ended Aug. 24 dropped 6,000 to 331,000 from a revised 337,000 the week before that was higher than initially reported, the Labor Department said today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for a drop to 332,000.
The equity benchmark has fallen 2.8 percent in August amid speculation the Fed will pare stimulus measures and concern the U.S. will take military action against Syria.
Minutes of the Fed’s July meeting released on Aug. 21 showed policy makers supported cuts to the central bank’s bond-buying program this year if the economy improves in line with its forecasts. Fed stimulus helped push the S&P 500 up as much as 153 percent from its March 2009 low, data compiled by Bloomberg show.
The prospect of imminent military strikes on Syria receded as the U.K. and France said they favor waiting for the results of a United Nations investigation into alleged use of chemical weapons. The U.S., which says it has evidence that Syria’s government was responsible, won’t act without allies, Defense Secretary Chuck Hagel said today.
“We’re back to focusing on economic data, specifically out of the U.S. and Europe, and the Fed tapering, as the market is coming around to believe the Syrian conflict poses only a short-term risk,” said Manish Singh, who helps oversee $2 billion as head of investment at Crossbridge Capital in London. “I am of the opinion that tapering will happen in September, regardless of data.”
About 4.8 billion shares changed hands on U.S. exchanges. Trading is poised for the second-slowest month in at least five years, according to data compiled by Bloomberg. An average of about 5.5 billion shares changed hands each day this month. That’s about 50 million shares more than last August.
The Chicago Board Options Exchange Volatility Index, or VIX, increased 1.9 percent to 16.81. The equity volatility gauge has surged 42 percent since a five-month low on Aug. 5.
Eight out of 10 main groups in the S&P 500 rose, with phone companies advancing 1.2 percent to lead gains.
Verizon Communications rose 2.7 percent to $47.82. The company is in advanced talks to acquire Vodafone’s 45 percent stake in their Verizon Wireless venture for about $130 billion, people with knowledge of the matter said.
In a statement, Newbury, England-based Vodafone said there’s “no certainty that an agreement will be reached” as it holds discussions with New York-based Verizon. Bob Varettoni, a spokesman for Verizon, declined to comment.
Microsoft Corp. rose 1.6 percent to $33.55. Microsoft is in talks with Foursquare Labs Inc. about a potential investment in the social-media company, according to people with knowledge of the discussions.
An S&P index of homebuilders climbed 2.5 percent, after dropping 3.7 percent over the previous two days. PulteGroup Inc. rose 3.1 percent to $15.86 and Lennar Corp. advanced 3.2 percent to $32.62.
The Bloomberg U.S. Airlines Index rose 2 percent as US Airways Group Inc. advanced 4 percent to $15.96. Delta Air Lines Inc. jumped 2.7 percent to $19.64.
Guess soared 13 percent to $30.82. Second-quarter adjusted earnings per share amounted to 52 cents, exceeding the average estimate of 35 cents in a survey of analysts. The company raised its full-year earnings guidance to $1.78 to $1.92 a share, from a previous prediction of $1.70 to $1.90. Analysts had forecast $1.79.
Exxon Mobil declined 1.8 percent to $87.27, while Chevron Corp. lost 1.2 percent to $120.37. Oil futures retreated 1.2 percent after climbing to the highest level since May 2011 yesterday.
Campbell Soup Co. fell 3.1 percent to $43.33 after the company reported fourth-quarter sales lower than analysts’ estimates.
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