U.S. Stocks Gain as Jobless Data Boost Economic OptimismJoseph Ciolli
U.S. stocks rose, sending benchmark indexes to records, as the European Central Bank vowed to increase stimulus efforts if needed and a drop in American jobless claims bolstered optimism in the economy.
Tesla Motors Inc. rose 4.4 percent as it predicted “several years” of 50 percent sales growth amid a surge in orders. Whole Foods Market Inc. rose 12 percent after posting better-than-forecast quarterly profit. Genworth Financial Inc. plunged 38 percent as the insurer predicted a tougher path ahead after a record loss. Qualcomm Inc. slid 8.6 percent after saying a Chinese government probe will curb profit.
The Standard & Poor’s 500 Index rose 0.4 percent to 2,031.21 at 4 p.m. in New York. The Dow Jones Industrial Average added 69.94 points, or 0.4 percent, to 17,554.47. About 6.8 billion listed shares changed hands in the U.S., about 6 percent higher than the three-month daily average.
“The policy and macro news were both positive, and that’s giving the market something of a positive bias as we go through the day,” Alan Gayle, who helps oversee about $50 billion as a senior strategist at RidgeWorth Capital Management, said in a phone interview from Atlanta. “Outside of the U.S., other major players are taking aggressive policy steps to stabilize and re-accelerate growth, and that’s putting a floor under the equity markets.”
Draghi faces pressure to do more to support a slowing euro-area economy after the Bank of Japan last week unexpectedly boosted its stimulus plan. Draghi said policy makers will be ready to implement further stimulus measures if needed as he signaled officials may cut growth forecasts next month. ECB officials were unanimous on more stimulus if needed, Draghi told reporters today after keeping interest rates unchanged.
In stressing unanimity, Draghi is seeking to smooth over divisions in his own ranks about the precise way the ECB can aid the economy more, as pessimism about the outlook builds. While the central bank is already expanding its range of asset purchases, it has yet to commit to broad-based bond buying, or quantitative easing.
The S&P 500 and Dow climbed to records yesterday after election results shifted control of the Senate from Democrats to Republicans while a report showed improvement in the labor market.
The benchmark index has rebounded 9.1 percent from a six-month low on Oct. 15. S&P 500 companies are beating analysts’ earnings estimates at the fastest pace in four years, while recent economic data have pointed to improvements in the U.S. labor market and consumer sentiment.
First-time jobless claims dropped 10,000 to a three-week low of 278,000 in the week ended Nov. 1, the Labor Department reported today. The median forecast of 50 economists surveyed by Bloomberg called for 285,000. The four-week moving average, a less-volatile measure of job cuts, reached the lowest level in more than 14 years.
Labor Department figures tomorrow may show nonfarm payrolls rose 235,000 last month and that the jobless rate probably held at a six-year low.
Of the S&P 500 members that have reported their latest quarterly results, 80 percent topped profit projections, while 60 percent beat sales estimates, according to data compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX, fell 3.5 percent to 13.67. The measure surged to 26.25 on Oct. 15 before declining 47 percent through the end of the month.
The S&P 500 Industrials Index rose for a third day, adding 1.1 percent. Deere & Co. and Agco Corp. climbed more than 2.4 percent amid speculation that the companies will benefit from tax credits following yesterday’s midterm election. The likelihood that two expired tax credits may be retroactively renewed in late 2014 could soften a sales decline for machinery companies like Deere and Agco, according to Bloomberg Industries analysts Caitlin Webber and Karen Ubelhart.
Tesla rose 4.4 percent after projecting to sell 50,000 Model S cars in 2015. Chief Executive Officer Elon Musk said Tesla is accelerating production and sees 50 percent growth next year lasting “probably for several years.”
Whole Foods rallied 12 percent. Fiscal fourth-quarter profit topped analysts’ estimates as the grocery-store chain slashed prices to win over bargain-hunting shoppers.
Gauges of utilities and telecommunications shares declined more than 0.8 percent for the biggest losses among the 10 main industries in the S&P 500. Energy shares rose even as West Texas Intermediate crude slid 1 percent to $77.91. Oil touched the lowest price in three years earlier this week.
Genworth plunged 38 percent, the most since the financial crisis in 2008. The company yesterday posted a quarterly loss of $844 million, driven by costs tied to its long-term care insurance operation.
“The turnaround in this business will be more difficult and prolonged,” Chief Executive Officer Tom McInerney said in a statement. “Despite this setback, we remain steadfast in our commitment to transform this business.”
Qualcomm slid 8.6 percent. A previously disclosed investigation by China’s antitrust regulator into its business practices will hurt sales and profit next year. The chipmaker also said U.S. and European regulators are conducting inquiries related to its licensing and phone-chip businesses.
The S&P 500 Utilities Index lost 1.8 percent. AES Corp. was the biggest decliner in the group, falling 6.4 percent. The electrical power generator and distributor reported third-quarter sales that fell short of consensus analyst estimates.