Bloomberg News

U.S. Stocks Rise a Fifth Week on Employment, Manufacturing Data

February 05, 2012

Feb. 4 (Bloomberg) -- U.S. stocks rose, giving the Standard & Poor’s 500 Index a fifth straight weekly advance, after reports showed employment in the world’s largest economy topped forecasts and global manufacturing is strengthening.

Bank of America Corp. and American Express Co. jumped at least 4.8 percent this week, leading gains in the Dow Jones Industrial Average, which climbed to its highest level since May 2008. Financial and technology companies added at least 3.1 percent as a group, posting the biggest advances out of 10 industries in the S&P 500. Whirlpool Corp. surged 26 percent after forecasting profit that beat analysts’ estimates.

The S&P 500 rose 2.2 percent to 1,344.90 since Jan. 27, completing the longest weekly rally since January 2011. It is up 6.9 percent this year, the best annual start since 1987. The Dow added 201.77 points, or 1.6 percent, to 12,862.23 this week.

“We’re in a positive feedback loop,” Bernard Schoenfeld, the New York-based senior investment strategist at BNY Mellon Wealth Management, which oversees about $168 billion, said in a telephone interview. “The employment picture is improving,” he said. “We’re seeing earnings growth continue to be favorable, valuations are attractive, and the economy seems to be improving.”

The S&P 500 has recovered after the European debt crisis drove the index down 19 percent between April 29 and Oct. 3, boosted by better-than-estimated economic data and corporate profits. It’s 1.4 percent away from surpassing its peak nine months ago and reaching the highest since June 2008. This week’s advance was propelled by the American unemployment rate dropping to a three-year low and manufacturing gauges in the U.S., China and Europe increasing.

Jobless Rate, Factories

Stocks gained yesterday after Labor Department figures showed payrolls increased by 243,000 in January, the most since April and exceeding all forecasts in a Bloomberg News survey. The median economist projection in the survey called for an increase of 140,000. The unemployment rate dropped to 8.3 percent, the lowest since February 2009.

The S&P 500 increased three straight days to end the week, breaking a four-day losing streak. Equities rallied on Feb. 1 after data showing manufacturing in the U.S. grew at the fastest pace since June. The U.K.’s factory measure unexpectedly reached an eight-month high. The benchmark gauge for U.S. equities has climbed 22 percent from its 2011 low of 1,099.23.

‘Stars Are Aligning’

“The stars are aligning to push the market higher,” Brian Jacobsen, who helps oversee about $209 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. The jobs data “was a very encouraging report. It should silence a lot of the skeptics out there who are saying that Europe is going to push the U.S. into a recession.”

The Morgan Stanley Cyclical Index rallied to its highest level since July 28, rising 3.5 percent.

Financial companies in the S&P 500 climbed 4.2 percent as a group, the largest gain among 10 industries. Bank of America, the second-largest U.S. bank by assets, advanced 7.5 percent to $7.84, while American Express, the biggest credit-card issuer by purchases, added 4.8 percent to $52.25.

Technology companies increased 3.1 percent, the second- biggest increase in the benchmark measure. Facebook Inc. filed to raise $5 billion in the largest Internet initial public offering on record. Zynga Inc., the largest developer of games for the company, surged 33 percent to $13.39. Groupon Inc. rallied 22 percent to $24.43.

Whirlpool, Marathon

Whirlpool rallied 26 percent, the most in the S&P 500, to $68.66. The world’s largest appliance maker forecast that it would earn at least $6.50 a share from continuing operations in 2012, compared with the $5.80 average of analyst estimates compiled by Bloomberg.

Marathon Petroleum Corp. jumped 17 percent, the second- biggest gain in the S&P 500, to $43.98. The crude refiner that was spun off from Marathon Oil Corp. in June, will consider an initial public offering for its pipeline assets that may be worth as much as $6.2 billion. The company also said it will buy back as much as $2 billion in shares.

Genworth Financial Inc. rose 17 percent to $9.17. The mortgage guarantor and life insurer swung to a fourth-quarter profit on fewer claims tied to delinquent borrowers. Profit in the three months ended Dec. 31 was 22 cents a share, compared with a loss of 33 cents a year earlier. The company, which dropped by half last year, has gained 40 percent since Dec. 31.

--With assistance from Rita Nazareth and Nikolaj Gammeltoft in New York. Editors: Nick Baker, Jeff Sutherland

To contact the reporters on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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