U.S. Stocks Rise as Retail Sales, Confidence Top Estimates By Elizabeth Stanton
Dec. 11 (Bloomberg) -- U.S. stocks rose, erasing a weekly loss for the Standard & Poor’s 500 Index, as better-than- estimated retail sales and consumer confidence data bolstered optimism that the economic recovery is strengthening.
Macy’s Inc. and Best Buy Co. climbed more than 2.6 percent after the Commerce Department reported that sales at U.S. retailers increased 1.3 percent in November, more than double the median economist estimate in a Bloomberg survey. Alcoa Inc. rallied 8.2 percent after JPMorgan Chase & Co. increased its earnings estimate. Delta Air Lines Inc. led the Amex Airline Index up 6.3 percent, its best gain since September, as a stronger dollar pushed oil below $70 a barrel.
“There were concerns going in, because same-store sales have been weak especially for the department stores, that this number might be at risk, so it’s definitely positive for the market,” said Noman Ali, part of a group that manages $3 billion of U.S. equities at MFC Global Investment Management Inc. in Toronto.
The S&P 500 added 0.4 percent to 1,106.41 as of 4:05 p.m. in New York. The Dow Jones Industrial Average climbed 65.67 points, 0.6 percent, to 10,471.5. Almost five stocks rose for every two that dropped on the New York Stock Exchange.
Retailers in the S&P 500 climbed 1.3 percent as a group after the Commerce Department data signaled that consumer spending is gathering speed heading into 2010, while the Reuters/University of Michigan index of consumer sentiment rose to a preliminary 73.4 for December from 67.4.
Weekly Loss Erased
The S&P 500 added less than 0.1 percent this week as gains over the past three days erased losses on Dec. 7 and 8 after a downgrade of Greece’s credit rating added to concerns that governments globally have amassed too much debt.
The index has climbed 64 percent from a 12-year low March 9 as a four-quarter economic contraction ended. The nine-month rally pushed valuations in the S&P 500 to about 22 times its companies’ reported operating earnings, near the highest since 2002, Bloomberg data show.
Thomas Lee, head of U.S. equity strategy at JPMorgan Chase & Co., forecast the S&P 500 will end next year at 1,300, up almost 18 percent from its close yesterday. Lee’s forecast a year ago for 2009 was 1,100. He raised it to 1,160 on Nov. 20. Lee in a report said investors “remain too pessimistic regarding the durability and trajectory of 2010 U.S. growth as well as valuation upside.”
The forecast level represents a multiple of 14.4 times the $90 a share the bank estimates the companies in the index will earn in 2011, the report said.
China Production
European and Asian shares advanced after China’s factory output climbed 19.2 percent from a year earlier, the statistics bureau said in Beijing. That was more than the 18.2 percent median estimate in a Bloomberg News survey of 25 economists.
Macy’s, the second-biggest U.S. department store chain, rose 6.2 percent to $17.02. Best Buy, the world’s largest electronics retailer, climbed 2.6 percent to $44.34, the highest since September 2008. Macy’s on Dec. 3 reported November sales that missed analyst estimates.
Alcoa rose the most in the Dow, climbing 8.2 percent to $14.61. The largest U.S. aluminum producer had its stock-price estimate raised to $25 from $22 by JPMorgan, which said the company’s earnings will increase more than previously projected next year as metal prices gain.
All 13 stocks in the Amex Airline Index advanced as crude dropped for an eighth day, its longest streak in six years. The Dollar Index, which gauges the currency against six major U.S. trading partners, climbed 0.7 percent to 76.544, a two-month high on a closing basis.
United Technologies Rallies
United Technologies Corp. accounted for about a sixth of the Dow’s advance, rising 2.2 percent to $69.40. The maker of Pratt & Whitney jet engines and Otis elevators forecast 2010 sales will rise to $54 billion to $55 billion, beating the average analyst estimate of $53.4 billion in a Bloomberg survey.
CVS Caremark gained 2.3 percent to $32.22. The operator of more than 7,000 U.S. drugstores won a two-year contract to provide pharmacy-benefits services to retired Texas teachers.
Gamestop Corp. added 2.6 percent to $21.72. The world’s largest video-game retailer said its new software sales increased 15 percent in the U.S. last month.
JPMorgan fell 0.8 percent to $40.96. Warrants giving investors a long-term option to buy the shares of the second- largest U.S. lender at $42.42 each until Oct. 28, 2018, were priced at $10.75 in a sale by the U.S. Treasury.
The auction was part of JPMorgan’s exit from the government’s Troubled Asset Relief Program, or TARP. The Treasury beginning in October 2008 took warrants from more than 200 banks in exchange for bailout funds, to compensate taxpayers for the risk of investing in the companies.
Chipmakers Slump
Shares of chipmakers, the fourth best-performing of 24 industry groups in the S&P 500 this year, retreated after National Semiconductor Corp. released fiscal second-quarter earnings. The maker of chips that control power in electronic devices fell 3.6 percent to $14.73 despite beating analyst estimates for sales and profit and forecasting higher third- quarter sales than analysts estimated.
IMS Health Inc. had the steepest drop in the S&P 500, tumbling 6.1 percent to $20.05 on investor concern that a proposed ban on data-mining may scuttle its $5.2 billion sale to TPG Inc. and the CPP Investment Board.
Barrick Gold Corp. led declines in mining company shares as the dollar’s advance curbed demand for bullion. Gold futures for February delivery fell $6.30, or 0.6 percent, to $1,119.90 an ounce on the Comex division of the New York Mercantile Exchange, capping its biggest weekly drop since February. Gold climbed to a record $1,227.50 an ounce on Dec. 3.
To contact the reporter on this story: Elizabeth Stanton in New York at [email protected]
