U.S. Stocks Post Biggest Rally in 1 Month as Apple Surges

U.S. stocks rose, giving benchmark indexes the biggest rallies in a month, as higher forecasts from the International Monetary Fund and gains in Spanish bonds overshadowed declines in housing starts and factory production.

Apple Inc., the most valuable technology company, surged 5.1 percent after yesterday capping its longest losing streak since October. Bank of America Corp. and Citigroup Inc. added more than 1.4 percent as European lenders jumped after Spain sold more debt than targeted. Coca-Cola Co., rose 2.1 percent as earnings beat estimates. International Business Machines Corp. and Intel Corp., which gained in anticipation of their results, slumped at least 2.4 percent in extended trading.

The Standard & Poor’s 500 Index rose 1.6 percent to 1,390.78 at 4 p.m. New York time, after falling 1.3 percent in two days. The Dow Jones Industrial Average added 194.13 points, or 1.5 percent, to 13,115.54. The Nasdaq Composite Index climbed 1.8 percent to 3,042.82. About 6 billion shares changed hands on U.S. exchanges, or 11 percent below the three-month average.

“The market was able to shrug off disappointing U.S. economic reports,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management. His firm oversees $160 billion. “We’ve got data showing the German economy is growing strong, positive earnings surprises in the U.S. and some good news out of Spain. There’s a lot of room for positive surprises given how pessimistic things were.”

Stocks rallied as the IMF raised its 2012 global growth estimate to 3.5 percent, German investor confidence rose and Spanish bonds gained. Expectations that Europe’s crisis is stabilizing overshadowed data showing that production at U.S. factories dropped in March for the first time in four months and builders broke ground on fewer houses than forecast.

Earnings Season

Today’s gain extended the 2012 rally for the S&P 500 to 11 percent as investors bought stocks amid better-than-estimated economic and corporate data. While S&P 500 per-share profit growth slowed to 1.7 percent during the first three months of the year, it will accelerate to 8.6 percent during all of 2012, according to analyst estimates compiled by Bloomberg.

All 10 groups in the S&P 500 advanced as technology, energy and industrial shares had the biggest gains. The Morgan Stanley Cyclical Index of companies most-tied to economic growth added 1.4 percent as 28 of its 30 stocks gained.

“It’s a broad-based rally,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said in a telephone interview. “There’s maybe a bit of ‘risk-on’ trade. Nonetheless, it seems like a healthy advance. Maybe what we’ve seen is the end of the pullback in equities.”

Best Since 1998

Since reaching an almost four-year high on April 2, the S&P 500 slumped 3.5 percent through yesterday on concern about global economic growth. The index is still down 1.3 percent in April, after capping the best first-quarter rally since 1998.

Apple rose 5.1 percent to $609.70, wiping out yesterday’s drop, amid predictions that quarterly results due next week will underscore buoyant demand for iPhones and iPads, the company’s best-selling products.

The KBW Bank Index added 1.7 percent as all of its 24 stocks gained. Bank of America added 1.5 percent to $8.92. Citigroup increased 3.2 percent to $35.08.

Coca-Cola gained 2.1 percent to $73.95. Chief Executive Officer Muhtar Kent has introduced smaller package sizes to attract price-conscious consumers as part of an effort to spur sales in North America.

Stocks also rose in anticipation of earnings at some of the largest technology companies. IBM, which jumped 2.3 percent to $207.45 in regular trading, tumbled 2.4 percent to $202.50 at 4:55 p.m. New York time. The biggest computer-services provider reported revenue that missed projections.

Intel’s Results

Intel slumped 2.9 percent to $27.64 in extended trading, after gaining for a second day ahead of its results. The world’s largest semiconductor maker predicted higher second-quarter sales than some analysts had estimated as it ships new personal-computer and server chips and shortages of hard drives abate.

First Solar Inc. surged 10 percent to $22.96. The largest thin-film panel maker will cut 30 percent of its workforce, about 2,000 jobs, as demand in Europe slows faster than the company can expand in emerging markets in Asia.

Goldman Sachs Group Inc. fell 0.7 percent to $116.86. The fifth-biggest U.S. bank by assets reported a 23 percent decline in first-quarter profit. Revenue from trading bonds, currencies and commodities lagged behind JPMorgan Chase & Co. The company also boosted its dividend 31 percent.

No Harm

Whirlpool Corp. slumped 4.3 percent, the most in the S&P 500, to $68. The U.S. International Trade Commission said pricing and subsidies for refrigerators made by LG Electronics Inc. and Samsung Electronics Co. didn’t harm the U.S. industry.

Allocations in U.S. stocks almost doubled in April on renewed concern that the euro-area debt crisis will worsen, prompting investors to sell European equities and hoard cash, a Bank of America survey showed.

A net 27 percent of 191 respondents, who together manage $554 billion, said they were overweight U.S. stocks, meaning they hold more than is represented in benchmarks. That’s up from 14 percent last month. Expectations for an appreciation in the dollar hit the third-highest level in more than 10 years.

The U.S. “is a default for investors,” said Gary Baker, BofA’s head of European equity strategy, at a press briefing in London. “If you’re concerned about growth, and not sure how concerned you should be, ultimately the U.S. is still your safest haven.”