U.S. Stocks Gain for Month as Airlines, Retailers Rally

U.S. stocks rose for the week, capping a second straight monthly increase, as global central banks added stimulus and plunging oil prices triggered gains in consumer companies that overshadowed a slump in energy shares.

Airlines surged 17 percent in November, while gauges of consumer shares rose more than 5 percent ahead of the holiday season. Both groups benefited as West Texas Intermediate crude plummeted 18 percent to a five-year low in the month, dragged lower by rising U.S. supplies and a refusal by OPEC to reduce output. That sent energy stocks down 8.9 percent.

The Standard & Poor’s 500 Index has rallied 11 percent since sinking to a six-month low on Oct. 15. The benchmark index has been boosted by better-than-forecast economic data, including an upward revision for third-quarter U.S. gross domestic product. It’s also been aided by China’s decision to cut interest rates, as well as fresh stimulus from the Bank of Japan and European Central Bank. The index has advanced 12 percent this year.

“Lower fuel prices have amounted to a major injection of consumption for consumers this quarter and higher spending patterns going into the holidays,” Chad Morganlander, a money manager at St. Louis-based Stifel Nicolaus & Co., which oversees about $160 billion, said in a phone interview. The lower energy prices have “thrown a wet blanket on the U.S. energy complex, but there’s monetary stimulus across the globe that’s ginning up confidence,” he said.

Global Stocks

The S&P 500 rose 2.5 percent to 2,067.56 for the month, reaching an intraday high on Nov. 28. The Dow Jones Industrial Average climbed 437.72 points, or 2.5 percent, to 17,828.24 for its second straight monthly increase. The Russell 2000 Index was little changed, while the Nasdaq Composite Index jumped to a 14-year high after a 3.5 percent rally. The gauge is about 5 percent from an all-time high reached in 2000. The Stoxx Europe 600 Index jumped 3.1 percent, as Germany’s DAX Index rose 7 percent, the biggest monthly gain since 2012.

Thirty-eight out of 43 energy stocks in the S&P 500 dropped in November amid plummeting oil prices. Denbury Resources Inc., Transocean Ltd. and Nabors Industries Ltd. led the decline, falling more than 26 percent.

The Organization of Petroleum Exporting Countries kept its production ceiling unchanged, underscoring the price war in the crude market and challenge to U.S. shale drillers. New York-traded crude extended its monthly loss by falling 10 percent on Nov. 28 to settle at $66.15 a barrel, the biggest single-day drop for a front-month contract since 2009.

The market pressure stemming from falling oil was offset in November by economic data that exceeded analysts’ estimates. The U.S. economy expanded at a 3.9 percent annualized rate in the third quarter, up from an initial reading of 3.5 percent and more than the 3.3 percent median estimate in a Bloomberg survey.

Consumer Confidence

Consumer sentiment climbed to a seven-year high in November as Americans’ views of their financial well-being improved, according to the Bloomberg Consumer Comfort Index. Earlier in the month a report showed the U.S. unemployment rate fell to 5.8 percent in October, the lowest since July 2008.

“You look at the combination of improvement in labor and the substantial decline in gas prices and I think we’re in a fortunate state of affairs,” Erik Wytenus, a Palm Beach, Florida-based global investment specialist at J.P. Morgan Private Bank, said in a phone interview. The division oversees more than $1 trillion in client assets. “With good economic performance and positive stories in the labor markets, we maintain a firm-footed position in how we engage risk markets.”

Central Banks

Europe’s equity benchmark gained 3.1 percent this month, as Mario Draghi said the European Central Bank may broaden its asset-buying program to include the purchase of government bonds, while central banks in Japan and China stepped up measures to support their economies. The MSCI Asia Pacific Index slipped 0.8 percent for November.

The MSCI All Country World Index added 1.5 percent while emerging markets dropped 1.3 percent.

The Chicago Board Options Exchange Volatility Index, the gauge of options prices known as the VIX, fell 5 percent to 12.33. The benchmark gauge of price swings climbed to a more than two-year high on Oct. 15.

Consumer-staple and consumer discretionary companies were the two best-performing groups in the S&P 500 this month, rising more than 5.2 percent. The S&P 500 Retail Index climbed 6 percent to a record.

The National Retail Federation has said holiday spending will rise 4.1 percent this year, beating last year’s 3.1 percent gain. The season is key for retailers, with sales in November and December accounting for about 19 percent of annual revenue, according to the NRF.

Retailers Gain

Target Corp. and Best Buy Co. led gains among retailers, climbing more than 15 percent in November. Ross Stores Inc. and Dollar Tree Inc. increased more than 12 percent.

Airline stocks led a 2.8 percent monthly rise in S&P 500 industrial companies as Southwest Airlines Co. climbed 21 percent, while Delta Air Lines increased 16 percent. The Bloomberg U.S. Airlines Index surged 17 percent in November.

Whole Foods Market Inc. led gains in the S&P 500, rising 25 percent for its biggest monthly increase since February 2010. The grocery-store chain posted better-than-forecast quarterly profit as it slashed prices to win over bargain-hunting shoppers.

Genworth Financial Inc. was the biggest decliner in the benchmark equity gauge, plunging 35 percent in November. The insurer predicted a tougher path ahead after reporting a record quarterly loss of $844 million, driven by costs tied to its long-term care insurance operation. The company’s credit rating was also cut to junk.

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