U.S. Stocks Rise as Obama Weighs Syria Alternatives, Apple Drops
International Business Machines Corp. surged 2.2 percent after agreeing to sell its customer-care outsourcing business to Synnex Corp. (SNX) for $505 million. Marriott International Inc. increased 3.2 percent after a Chinese land developer said he wants to buy hotel-management companies in the U.S. Apple plunged 5.4 percent as the price of its new lower-cost iPhone disappointed analysts.
The S&P 500 rose 0.3 percent to 1,689.13 at 4 p.m. in New York, the seventh straight winning session and the highest level since Aug. 13. The Dow Jones Industrial Average, which includes IBM and not Apple, (AAPL) jumped 135.54 points, or 0.9 percent, to 15,326.60, also a one-month peak. About 5.8 billion shares changed hands on U.S. exchanges, 4 percent below the three-month average.
“We’re not out of the woods on news from Syria yet, but for the time being the market has digested the decision to delay action,” Russell Croft, who helps manage $900 million as a Croft-Leominster Inc. fund manager in Baltimore, said by phone. “Right now all eyes are on next week’s Fed meeting, that’ll be the big driver in the market with a few data points between now and then.”
The S&P 500 has advanced 3.4 percent so far in September, as reports showed China’s economy has strengthened, while concern abated that the U.S. will soon bomb Syria.
President Barack Obama said last night in an address from Washington that he will pursue a proposal by Russia for Syria to surrender its stockpiles of chemical weapons to international authorities. He had said he would ask Congress to authorize the use of military force against President Bashar al-Assad’s regime following a suspected chemical-weapons attack on Aug. 21 that the U.S. says killed more than 1,400 people.
The tensions over Syria have recently overshadowed investor concern that the Federal Reserve will pare back its record stimulus following its Sept. 17-18 meeting. The central bank is watching economic data as it considers reducing the monthly $85 billion in asset buying.
Economists estimate the Fed this month will taper its monthly bond buying by $10 billion, to $75 billion, according to the median of 34 responses in a Bloomberg News survey. The stimulus has helped the S&P 500 rally as much as 153 percent since the beginning of the bull market in March 2009.
Speculation about the stimulus has whipsawed stocks since May, when Chairman Ben S. Bernanke first indicated cuts could start this year. The S&P 500 tumbled 5.8 percent from a record high on May 21 through June 24. It rebounded 8.7 percent to close at its latest all-time high of 1,709.67 on Aug. 2. The gauge then slumped as much as 4.6 percent before the current rally brought it back to within 1.2 percent of the record and above the May 21 peak.
Stanley Druckenmiller, who boasts one of the hedge-fund industry’s best long-term track records of the past three decades, said ending the bond buying over the next year will roil markets.
“I really don’t care whether we go to $70 billion or $65 billion in September,” Druckenmiller said today in an interview with Bloomberg Television. “But if you tell me quantitative easing is going to be removed over nine or 12 months, that is a big deal.”
The Chicago Board Options Exchange Volatility Index (VIX), or VIX, dropped 4.9 percent to 13.82, the lowest in a month. The equity volatility gauge is down 19 percent in September after rallying 26 percent in August, the biggest monthly gain since May 2012.
Eight of 10 industries in the S&P 500 (SPX) advanced, with energy stocks and consumer-staples producers rising at least 0.8 percent. Newfield Exploration Co. jumped the most in the benchmark index for U.S. equities, gaining 7.5 percent to $26.07 as crude supplies in Cushing, Oklahoma, tumbled to the lowest since February 2012.
Apple dragged technology shares lower, dropping 5.4 percent to $467.71 for its biggest slide since April 17. The company introduced two models of its iPhone yesterday and was cut to neutral from buy at Bank of America Corp., which said that the lower-cost smartphone cost too much to increase sales in emerging markets.
Credit Suisse Group AG lowered the Cupertino, California-based company to neutral from outperform, UBS AG cut its rating on the stock to neutral from buy and Piper Jaffray Cos. lowered its 12-month price target on Apple’s shares to $640 from $655.
IBM jumped 2.2 percent to $190.70 for the biggest gain in the Dow. The world’s largest computer-services provider agreed to sell the unit to Synnex to focus on more profitable investments. IBM is the largest Dow component by index weight.
An index of homebuilders rallied 2.5 percent to the highest since Aug. 5 as yields on 10-year Treasury notes declined after a $21 billion auction drew the biggest demand in six months.
Lennar Corp. jumped 3.4 percent to $34.61 and D.R. Horton Inc. gained 3.2 percent to $19.50 as all 11 members of the S&P Supercomposite Homebuilding Index advanced.
Facebook Inc. climbed 3.3 percent to a record close of $45.04. Investors bet the operator of the world’s most popular social-networking service, will benefit from growing demand for its mobile-advertising products.
Marriott International added 3.2 percent to $42.96. Wang Jianlin, China’s richest man and the owner of the country’s biggest commercial land developer, said he has hired two investment banks to buy hotel-management companies.
Verizon Communications Inc. rose 0.1 percent to $46.52. The second-biggest U.S. telephone carrier began selling today $45 billion to $49 billion of bonds, more than twice the size of Apple’s unprecedented $17 billion issue in April, according to data compiled by Bloomberg. The company is raising money for its $130 billion acquisition of Vodafone Group Plc’s stake in Verizon Wireless.
The S&P 500 traded yesterday above its 150-day moving average for the 200th straight session. That’s the sixth longest streak since 1980 and the longest since 2004, according to Miller Tabak & Co.’s Jonathan Krinsky.
“We are in the midst of one of the greatest and steady bull markets we have seen in recent history,” the technical analyst wrote in a note today. “Eventually it will end. Until then, however, enjoy the ride.”
The index has rallied 21 percent through yesterday from the last time it traded below the trend line on Nov. 20, 2012.
In five prior instances, after crossing the 200-day mark, further gains were “rather limited” during four runs, while in the 1995-1996 streak, the S&P 500 rose another 15 percent, Krinsky wrote.
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