Dow Average Extends Record High on Job Data, Beige BookInyoung Hwang and Sarah Pringle
U.S. stocks rose, extending the Dow Jones Industrial Average’s record high, as a private report showed companies took on more workers than estimated and the Federal Reserve said the economy is growing.
Bank of America Corp. jumped 3.2 percent to pace gains among financial shares. VeriFone Systems Inc. rose 8.6 percent as the maker of credit-card terminals reported earnings that beat its forecasts. Sohu.com Inc., owner of China’s second-largest online video website, slid 11 percent after saying it’s not in talks to take the company private or delist its stock. Staples Inc. fell 7.2 percent after forecasting profit that was less than analysts estimated.
The Standard & Poor’s 500 Index increased 0.1 percent to 1,541.46 at 4 p.m. in New York. The Dow rose 42.47 points, or 0.3 percent, to 14,296.24. About 6.3 billion shares changed hands on U.S. exchanges today, in line with the three-month average.
“The market’s responding to some degree to fundamentals,” Stephen Wood, who helps manage about $163 billion as New York-based chief market strategist for North America at Russell Investments, said by telephone. “The economy is growing, albeit at a frustrating pace,” he said. “We’re seeing housing begin to contribute rather significantly to the economy.”
The Dow advanced to a record yesterday for the first time since 2007, erasing losses from the financial crisis as the bull market is poised to enter its fifth year. The S&P 500 is about 1.5 percent below its record high. The benchmark index has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
Companies added 198,000 workers in February, according to a private report based on payrolls. The increase in employment followed a revised 215,000 gain the prior month, figures from the ADP Research Institute showed today. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 170,000.
A Labor Department report this week may show private payrolls rose by 170,000 last month, according to the Bloomberg survey median. Orders to U.S. factories fell in January, weighed down by a slump in demand for military hardware and commercial aircraft, the Commerce Department reported today.
Fed Chairman Ben S. Bernanke described the job market as “generally weak” in testimony to a Senate committee on Feb. 26. The U.S. economy expanded at a modest to moderate pace across most of the country amid rising consumer demand for homes and autos, the Fed said in its Beige Book report, a summary and analysis of economic conditions in 12 U.S. districts.
“The big driver clearly is Fed policy,” Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said by telephone. “There’s likely to be a growth-related correction at the end of the first quarter or the beginning of the second. We don’t have to worry too much about the Fed withdrawing stimulus early. Our problem is the impact of fiscal contraction, sluggish growth and investors being overly enthusiastic about the implications of the housing market.”
Raw-material, financial and health-care companies had the largest gains among 10 groups in the S&P 500, while telephone and consumer staples fell the most. Bank of America rallied 3.2 percent to $11.92. Alcoa Inc., the largest U.S. aluminum producer, added 2.6 percent to $8.57.
VeriFone gained 8.6 percent to $20.90. First-quarter profit was 51 cents a share on an adjusted basis, more than the company’s Feb. 20 projection of 47 cents to 50 cents. The stock has plunged 29 percent this year.
Best Buy Co. increased 1.9 percent to $18.75. Jefferies Group Inc. raised its recommendation on the retailer to buy from hold, with analysts led by Daniel Binder saying management will cut costs and bring new processes, discipline and measurement to the business.
Freeport-McMoran Copper & Gold Inc. jumped 4.1 percent to $32.84. The world’s second largest copper miner may double sales of copper concentrate to China in the next three years as mined production expands, according to Javier Targhetta, the company’s senior vice president of marketing and sales.
Johnson Controls Inc. added 2.6 percent to $32.63 after rising as much as 8.3 percent earlier. The largest U.S. auto parts maker is exploring a sale of part of its automotive interiors and electronics unit that may fetch more than $1 billion, said two people familiar with the matter.
First Solar Inc. jumped 3.2 percent to $25.90. The biggest maker of thin-film solar panels was raised to market perform from underperform by Raymond James.
Sohu dropped 11 percent to $43.44 after releasing a statement today responding to “rumors circulating in the market.” The shares rallied 12 percent yesterday as Hong Kong’s South China Morning Post reported that Beijing-based Sohu is talking to investment banks and private equity funds about taking the company private, citing four unidentified people in the financial industry.
Staples tumbled 7.2 percent to $12.34 after forecasting profit for the current fiscal year that was less than analysts estimated amid what the chief executive officer called “a challenging sales environment.”
CEO Ron Sargent said Staples, the largest U.S. office-supply retailer, worked to manage its expenses in the fourth quarter when same-store sales in North America fell 5 percent. Retailers including Staples have faced more competition from the likes of Amazon.com Inc. as Americans increasingly shun big-box stores for the convenience of the Web.
BlackBerry, formerly known as Research In Motion Ltd., jumped 6.1 percent to $13.35. Chief Executive Officer Thorsten Heins told a Spanish newspaper that the company’s new Z10 model has drawn more interest than expected from users of rival smartphones. BlackBerry said today that the Z10 will go on sale in Mexico on March 20 through America Movil SAB’s Telcel unit.
EBay Inc. tumbled 3.1 percent to $53.57. The operator of the world’s largest online marketplace retreated after Colin Sebastian, an analyst at Robert W. Baird, said growth slowed in February as consumers curbed spending.