U.S. stocks rose, sending the Standard & Poor’s 500 Index to a one-year high, on speculation improving corporate earnings will extend a seven-month rally. Oil advanced to the highest price in seven weeks and metal prices gained as the dollar retreated.
Black & Decker Corp. jumped 7.6 percent after boosting its third-quarter earnings forecast. Ford Motor Co. gained 7 percent as the carmaker said sales in Europe increased 12 percent in September. YRC Worldwide Inc. led trucking companies higher as lenders said they will extend provisions of a loan agreement. The S&P 500 climbed for a sixth straight day, its longest streak since June 2007.
“The market will continue with a positive bias,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees $8 billion. “The profit reports that will begin to come out this week should be very solid and the economic data that’s coming out is quite encouraging.”
The S&P 500 advanced 0.4 percent to 1,076.19 at 4:06 p.m. in New York, above its highest close since Oct. 3, 2008. The Dow Jones Industrial Average rose 20.86 points, or 0.2 percent, to 9,885.8. The MSCI World Index of 23 developed nations climbed 0.5 percent to its highest closing level since Oct. 1, 2008.
About 6.6 billion shares changed hands on all U.S. exchanges, the fewest since Jan. 2 as trading slowed on the Columbus Day holiday. The bond market was closed. Benchmark equity indexes pared gains in the final two hours of the session after Homeland Security Secretary Janet Napolitano told Bloomberg Television that it was “fair to say” terrorists with al-Qaeda-style beliefs are in the U.S.
‘Another Element’
“That came out and knocked the market down,” said Stephen Lieber, chief investment officer of Alpine Woods Capital Investors LLC in Purchase, New York, which manages more than $7 billion. “We don’t know what it amounts to, but it’s throwing another element of uncertainty in the market that’s built up complacency.”
Intel Corp. and Johnson & Johnson, both scheduled to report quarterly results tomorrow, advanced at least 1.1 percent. The S&P 500 last week jumped 4.5 percent, its best gain since July, as Alcoa Inc. started the third-quarter earnings season with an unexpected profit and economic data signaled the U.S. recession is ending.
S&P 500 companies are projected to report a ninth straight quarter of declining profits, the longest streak since the Great Depression, before returning to earnings growth in the final three months of the year, analysts’ estimates compiled by Bloomberg show.
‘Some Caution’
“Some caution is advised given that better-than-expected earnings are already built into current prices and investor optimism appears to be building as the popular averages approach new round numbers,” Bruce Bittles, chief investment strategist at Robert W. Baird & Co. in Nashville, Tennessee, which manages $18 billion, wrote in a note to clients.
Black & Decker surged 7.6 percent to $50.82, its best gain since July and highest price since November. The manufacturer of Dewalt brand tools said net earnings will be about 91 cents a share in the third quarter because sales were higher than estimated. In July, it forecast earnings of 35 cents to 45 cents. Analysts projected 43 cents, the average of 10 estimates.
Oil and gas producers rallied the most among the 10 main industries in the S&P 500, adding 1.2 percent as a group. Exxon Mobil Corp., the largest U.S. energy company, climbed 1.2 percent to $70.13 for a sixth straight day of gains. Crude rose on the New York Mercantile Exchange for a third day, climbing 2.1 percent to $73.27 a barrel.
Dollar, Stocks Correlation
The Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, dropped 0.4 percent to 76.162.
The S&P 500 and the dollar are moving in opposite directions by the most in at least four decades. The stock index has surged 59 percent from a 12-year low on March 9. The Dollar Index fell 14 percent during the same period, including the steepest two-quarter drop since 1991.
Their so-called correlation coefficient using 120 days of data is minus 0.43, near the minus 0.45 reached in July, which was the lowest in the history of the 42-year-old Dollar Index.
“Whether it’s oil, gold or stocks, the weaker dollar is helping to inflate asset prices and it’s giving the market nominal gains,” said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York.
Ford jumped 7 percent to $7.62 for the biggest gain in more than two months. New versions of the Fiesta and Ka subcompacts attracted buyers and lifted sales, the company said.
KB Home Tumbles
Advanced Micro Devices Inc. added 4.4 percent to $6.14. The second-largest maker of personal-computer processors was raised to “buy” from “neutral” at UBS AG, which said near-term growth will improve on increased computer sales.
KB Home lost 7.8 percent to $15.17, the steepest drop in the S&P 500. The fifth-largest U.S. homebuilder by orders last year said it is being investigated by the Securities and Exchange Commission over “possible accounting and disclosure issues.”
Gannett Co. tumbled 2.7 to $13.24. The largest U.S. newspaper publisher’s USA Today announced a circulation decline on Oct. 9 that is likely to make it fall to No. 2 when the next audited figures are released on Oct. 26, The Wall Street Journal reported. The shares were also cut to “neutral” from “buy” by Sidoti & Co., which said the company’s third-quarter sales forecast trailed its estimate. |
