U.S. Stocks Post Weekly Gain on Economic ReportsInyoung Hwang and Katie Brennan
U.S. stocks rose for the week, snapping two weeks of declines for benchmark indexes, as economic data topped estimates and comments by Federal Reserve officials eased concerns over stimulus plans.
Home Depot Inc. jumped 4.9 percent, leading gains among the biggest U.S. companies, as a Standard & Poor’s index of homebuilders rallied on reports showing an improving market. Eight out of 10 groups in the S&P 500 rose, as utility and consumer-discretionary shares led advances. Time Warner Cable Inc. and Cablevision Systems Corp. surged more than 10 percent after a report said Charter Communications Inc. is considering buying the cable providers.
The S&P 500 added 0.9 percent to 1,606.28 over the five days. The index capped its biggest three-day rally since early January on June 27. The Dow Jones Industrial Average climbed 110.20 points, or 0.7 percent, to 14,909.60. The S&P 500 lost 1.5 percent for the month, paring its advance in the second quarter to 2.4 percent and ending a streak of seven monthly advances, the longest run since September 2009.
“There was a parade of Fed speakers attempting to clarify recent comments and that helped to assuage fears that the Fed’s quantitative easing program would be scaled back,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion of assets, said by telephone. “The market is hypersensitive to any suggestion that the Fed begins to scale back purchases. The emphasis from the Fed is that it’s data dependent.”
Investors parsed comments during the week from Fed officials for clues to the central bank’s bond-buying plans. Fed Bank of New York President William C. Dudley said the central bank may prolong its asset-purchase program if the economy’s performance fails to meet its forecasts. Fed Bank of Richmond President Jeffrey Lacker said he expects the U.S. expansion to remain “sluggish” for “a couple more years.”
Figures from the Commerce Department on June 26 showed gross domestic product expanded at a revised 1.8 percent annualized rate from January through March, down from a prior estimate of 2.4 percent.
The S&P 500 has retreated 3.8 percent from a record high reached May 21 as Fed Chairman Ben S. Bernanke said the central bank may start paring quantitative-easing measures this year if the recovery continues to improve in line with forecasts. Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging as much as 147 percent from its March 2009 low.
Other data during the week bolstered optimism in the world’s largest economy as consumer confidence rose in June and claims for unemployment benefits fell. Separate reports showed consumer spending rebounded in May following the largest drop in more than three years, while bookings for durable goods climbed for a second month, topping economist forecasts.
Sales of new U.S. homes increased more than forecast in May to the highest level in almost five years, while home prices increased more than forecast in the 12 months through April. More Americans signed contracts in May to buy previously owned homes than at any time in more than six years.
The S&P Supercomposite Homebuilding Index rallied 1.5 percent for the biggest weekly gain in more than a month. Ten out of its 11 member rallied. Toll Brothers Inc., the biggest U.S. luxury-home builder, jumped 2.9 percent to $32.63.
Home Depot, the largest home-improvement retailer, added 4.9 percent to $77.47 for the biggest gain in the Dow.
“The headline story in the U.S. economy is the improving condition of the consumer, particularly driven by the improvement in housing,” Troy Logan, managing director and senior economist at Warren Financial Service, said by phone from Exton, Pennsylvania. His firm manages about $90 million. “We’re seeing improved price levels, new construction, home sales -- all positive things for economic growth. There’s a lot of momentum behind that sort of move.”
Global equities also climbed for the week after the People’s Bank of China said it has provided liquidity to some financial institutions to stabilize money-market rates. The statement was the first public confirmation of central bank action to ease a crunch that sent the overnight repurchase rate to a record.
The Chicago Board Options Exchange Volatility Index, or VIX, retreated 11 percent to 16.86. The benchmark gauge for U.S. stock options has surged 49 percent since hitting a six-year low in March.
U.S. stocks fell in the final minutes of the last trading day as investors adjusted positions for the end of the quarter. About 10.1 billion shares changed hands on June 28, capping the busiest month for American stock trading since November 2011.
Utility companies rose 3 percent for the biggest rally out of 10 S&P 500 groups during the week. Consumer-discretionary shares increased 2.5 percent. Financial stocks also advanced, as 22 out of the 24 U.S. lenders in the KBW Bank Index gained. JPMorgan Chase & Co., the largest U.S. bank by assets, added 1.6 percent to $52.79. M&T Bank Corp. climbed 5.2 percent to $111.75.
Time Warner Cable surged 10 percent to $112.48, while Cablevision rallied 12 percent to $16.82 for the two biggest increases in the S&P 500. Billionaire John Malone, whose Liberty Media Corp. owns 27 percent of Charter, is exploring scenarios for how Charter could acquire Time Warner Cable even after his initial overtures were rebuffed, according to people familiar with the discussions.
In addition, Charter is considering acquiring Cablevision, the fifth-largest provider, two people said.
Pandora Media Inc. jumped 23 percent to $18.40. The biggest online radio service said the number of U.S. listeners in cars topped 2.5 million. Cowen & Co. analyst John Blackledge boosted his rating on the stock to outperform from market perform.
Tenet Healthcare Corp. added 10 percent to $46.10. The third-biggest publicly traded U.S. hospital chain agreed to buy hospital operator Vanguard Health Systems Inc. for about $1.8 billion in cash. Vanguard surged 68 percent to $20.74.
Raw-materials companies fell the most out of 10 groups, losing 1.5 percent. Phoenix-based metals producer Freeport-McMoRan Copper & Gold Inc. tumbled 2 percent to $27.61. Barrick Gold Corp., the largest producer of the metal, erased 6.8 percent to $15.74 as gold posted its biggest quarterly drop since at least 1920, according to data compiled by Bloomberg.
BlackBerry fell 24 percent to $10.46 after reporting a surprise loss and weak sales of a new touch-screen model, underscoring its challenges in competing directly with Apple Inc.’s iPhone and Google Inc.’s Android.
Accenture Plc tumbled 9.4 percent to $71.96 for the biggest drop in the S&P 500. The world’s second-largest technology-consulting company’s sales forecast trailed analysts’ estimates. Rival International Business Machines Corp. fell 2.2 percent to $191.11 for the largest retreat in the Dow.