Dow Average Climbs Most in Two Months on China Exports

U.S. stocks rose, giving the Dow Jones Industrial Average its biggest gain since July 11, as exports from China topped forecasts and corporate acquisitions fueled optimism in the world’s largest economy.

Molex Inc. jumped 32 percent after agreeing to be acquired by Koch Industries Inc. Apple Inc. rose 1.6 percent before an investor event tomorrow where the company will unveil new iPhone models. A Standard & Poor’s index of homebuilders jumped 5.5 percent, the most in almost two months. Delta Air Lines Inc. rallied 9.4 percent as the world’s second-largest carrier will replace BMC Software Inc. in the S&P 500.

The S&P 500 gained 1 percent to 1,671.71 at 4 p.m. in New York, the highest level since Aug. 14. The benchmark gauge has rallied 2.4 percent over five days for the longest winning streak since July 15. The Dow added 140.62 points, or 0.9 percent, to 15,063.12. About 5.8 billion shares changed hands on U.S. exchanges, 3.2 percent below the three-month average.

“We’re latching on to the better trading in Asia after the Chinese data,” Robert Pavlik, New York-based chief market strategist at Banyan Partners LLC, said by phone. His firm manages about $4.4 billion. “The fact that nothing has transpired in Syria is also a positive in a strange sense. The Street is somewhat relieved that the U.S. hasn’t engaged in military action yet.”

The S&P 500 advanced 1.4 percent last week as data showed signs of economic growth and investors weighed prospects for central bank stimulus cuts amid tensions over Syria. The benchmark for U.S. equities retreated as much as 4.6 percent from the record high on Aug. 2. It has rebounded 2.5 percent from a two-month low on Aug. 27.

China Trade

Chinese exports climbed 7.2 percent in August from a year earlier, the General Administration of Customs said in Beijing yesterday. That compared with the 5.5 percent median estimate of 46 economists surveyed by Bloomberg and July’s 5.1 percent gain. Imports increased a less-than-estimated 7 percent.

“Economic data out of Asia seems to be supporting markets, but no doubt investors will remain vigilant in the short term about any developments in the Syria situation and the next move from the Federal Reserve,” James Butterfill, who helps oversee $44 billion as head of global equity strategy at Coutts & Co. in London, said by phone.

Fed Stimulus

The equities gauge has rallied 17 percent this year as the Fed continued to provide stimulus to the economy. A report Sept. 6 showed payrolls in the U.S. climbed less than projected in August and gains in the prior two months were revised downward, fueling speculation that any Fed move to taper its stimulus program will be limited.

Fed Bank of San Francisco President John Williams, who has backed record stimulus, said recent economic data signal gradual job market improvement in line with his expectations. The central bank will probably adopt a gradual, “multi-step” plan for tapering bond buying, Williams said today.

Economists forecast the central bank will reduce its monthly $85 billion in asset buying by $10 billion at its meeting on Sept. 17-18, according to the median of 34 responses in a Bloomberg News survey of economists.

President Barack Obama intensified his campaign to persuade a reluctant American public to back military action against Syria as Bashar al-Assad threatened retaliation “direct and indirect” if the U.S. attacks. Russia urged Syria to give up its stockpile of chemical weapons if doing so would help avoid a U.S.-led military strike, Foreign Minister Sergei Lavrov said.

President Speaks

Obama is scheduled to deliver a national address at 9 p.m. tomorrow. The Senate is expected to vote on a resolution by the end of this week and the House of Representatives will probably debate the proposal next week.

The Chicago Board Options Exchange Volatility Index, or VIX, dropped 1.4 percent to 15.63. The equity volatility gauge has cut its decline this year to 13 percent after rallying 32 percent since Aug. 5.

Raw-materials producers, technology and industrial shares rose at least 1.2 percent as all 10 S&P 500 industries advanced.

Caterpillar Inc., the largest manufacturer of mining and construction machinery, increased 2.6 percent to $85.59 for the biggest gain in the Dow. Alcoa Inc., the largest U.S. aluminum producer, added 2 percent to $8.08, while 3M Co., the maker of car fuel-system cleaners to dental braces, climbed 1.5 percent to $116.74.

Microsoft Corp. rose 1.6 percent to $31.66 to help lead gains among technology companies, while Cisco Systems Inc. advanced 1.6 percent to $23.92.

Koch Brothers

Molex soared 32 percent to $38.63 for the largest increase in the S&P 500. The maker of electronic components for products such as Apple’s iPhone agreed to a $7.2 billion acquisition by Koch Industries, the holding company controlled by the billionaire Koch brothers.

Koch will buy Molex’s shares for $38.50 apiece, a 31 percent premium over the publicly traded common stock, according to a statement today.

The U.S. market is poised for the busiest month of takeovers in more than six years. About $160 billion of mergers and acquisitions have been announced since the end of August, the most since July 2007, data compiled by Bloomberg show.

Among other deals today, Neiman Marcus Inc. agreed to sell itself to Ares Management LLC and the Canada Pension Plan Investment Board for $6 billion. Neiman’s private-equity owners TPG Capital and Warburg Pincus LLC paid about $5.1 billion for the Dallas-based retailer in 2005.

Apple Presentation

Apple added 1.6 percent to $506.17. The company will unveil a less expensive version of the iPhone and an upgrade of the iPhone 5 tomorrow, people with knowledge of the matter have said. The device is the country’s top-selling smartphone. FBN Securities Inc. raised its priced target on the stock to $600 from $575 today.

Delta advanced 9.4 percent, the most since April, to $21.76. The airline will join the S&P 500 after the close of trading tomorrow, according to a statement from S&P Dow Jones Indices on Sept. 6, making Atlanta-based Delta the second carrier in the index after Southwest Airlines Co. BMC is leaving the gauge after being bought by Bain Capital LLC.

An S&P index of homebuilders jumped 5.5 percent as Hovnanian Enterprises Inc. reported a profit for its fiscal third quarter as sales and prices increased amid a nationwide housing recovery.

Hovnanian, the best-performing U.S. homebuilder stock in the past year, rose 2.2 percent to $5.15. PulteGroup Inc., the largest U.S. homebuilder by market value, added 7.5 percent to $16.63 for the second-biggest gain in the S&P 500. D.R. Horton Inc. advanced 6.5 percent to $19.28.

Refiners, Hospitals

Crown Castle International Corp. climbed 2.7 percent to $72.45. The provider of infrastructure for wireless communications said it will take steps to qualify as a real estate investment trust for tax purposes.

Expedia Inc. climbed 1.9 percent to $50.64. The provider of online travel services was raised to buy from neutral by Lazard Capital Markets LLC.

Refiners fell after Simmons & Co. downgraded the sector, citing the likelihood of significant cuts to third-quarter earnings forecasts. Tesoro Corp. lost 1.3 percent to $46.16 while Marathon Petroleum Corp. slipped 1.8 percent to $69.61. Both had their recommendations reduced to neutral from overweight.

Hospital operators fell after Aetna Inc., the third-biggest U.S. health insurer, said that patient volumes will be weak in the third quarter. The comments at a Morgan Stanley conference today may have “spooked” some non-health-care “generalist” investors, who had not anticipated lower admissions, Brian Tanquilut, an analyst at Jefferies & Co. in Nashville, Tennessee, said in an interview.

HCA Holdings Inc., the largest publicly traded hospital chain, declined 1.7 percent to $38.84. Tenet Healthcare Corp., the third largest, tumbled 3.7 percent to $38.39. Community Health Systems Inc. lost 4.3 percent to $37.99. The second-largest U.S. hospital chain was downgraded to neutral from buy at Citigroup Inc.

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