Bloomberg News

U.S. Stocks Rise as Energy Stocks Gain

March 23, 2012

Traders work on the floor of the New York Stock Exchange in New York. Photographer: Scott Eells/Bloomberg

Traders work on the floor of the New York Stock Exchange in New York. Photographer: Scott Eells/Bloomberg

U.S. stocks rose, trimming the biggest weekly drop of the year for the Standard & Poor’s 500 Index, as gains in commodity and energy companies amid rising oil prices offset an unexpected decline in new-home purchases.

Material and energy shares each climbed 1 percent, the most among 10 groups in the S&P 500, as crude rose on a report that sanctions will reduce Iranian exports. Chevron Corp. (CVX) gained 1 percent. Morgan Stanley (MS) added 3.8 percent, pacing an advance among financial companies, after it was raised to sector perform by Royal Bank of Canada. Bats Global Markets Inc. withdrew its initial public offering after errors on its own system derailed trading in the stock and forced a halt in Apple Inc. (AAPL)

The S&P 500 rose 0.3 percent to 1,397.11 at 4 p.m. in New York, paring the benchmark index’s decline for the week to 0.5 percent. The Dow Jones Industrial Average (INDU) gained 34.59 points, or 0.3 percent, to 13,080.73 today.

“Energy’s leading and it’s a reflection of the news out of Iran and concerns about a potential shortage of oil,” Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $85 billion, said in a telephone interview. “The market’s had a big run the first quarter and we could see some sort of consolidation phase, but I don’t see the market vulnerable to any significant correction. Despite the big run in stocks, investor sentiment has been contained.”

U.S. stocks retreated yesterday as manufacturing contracted in China and Europe and FedEx Corp. (FDX) tumbled amid a disappointing forecast. The S&P 500 is still up 2.3 percent for March, heading for its longest monthly rally since September 2009 as economic data topped forecasts and the European Central Bank disbursed more than 1 trillion euros ($1.3 trillion) to lenders.

Volume Slump

At the same time, American equity trading has struggled. Shares changing hands on all U.S. exchanges slumped 30 percent to 5.9 billion today from last week. The average volume in the past three months has been 6.61 billion, compared with the one- year average of 7.53 billion.

Raw-material (S5MATR) and energy companies had the biggest gains out of 10 groups in the S&P 500 today as commodity prices rose. Oil surged almost $3 a barrel after Reuters reported Iranian oil exports will drop by 300,000 barrels a day because of tighter sanctions.

Alcoa jumped 1 percent to $10.11, while Caterpillar added 1.3 percent to $107.83. Chevron climbed 1 percent to $106.36. Cabot Oil & Gas Corp. (COG) jumped 3.2 percent to $32.52, while Consol Energy Inc. (CNX) jumped 2.5 percent to $33.76.

Financial Stocks

Financial shares advanced 0.9 percent as a group. Morgan Stanley added 3.8 percent to $20.33. The New York-based firm was raised to sector perform from underperform at Royal Bank of Canada. Discover Financial Services (DFS) climbed 4.1 percent to $33.83 after the payments network company was raised to conviction buy at Goldman Sachs Group Inc.

The S&P Supercomposite Homebuilding Index (S15HOME) fell 1.2 percent. Stocks declined earlier today after figures from the Commerce Department showed that new-home sales fell 1.6 percent to a 313,000 annual pace, the slowest since October, from a 318,000 rate in January that was weaker than previously reported. The median estimate of 78 economists surveyed by Bloomberg News called for 325,000.

KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, sank 8.5 percent to $10.29. Revenue in the first quarter was $254.6 million, falling short of the average analyst estimate of $328.6 million.

Micron Technology Inc. (MU) fell 3.6 percent to $8.40 for the biggest drop in the S&P 500 after reporting a third consecutive quarterly loss as sluggish demand for personal computers dragged down chip prices.

‘Bit of Nervousness’

“There’s a little bit of nervousness this week,” Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, said in a telephone interview. The firm oversees $40 billion. “This was the week where the market had a little bit of second guessing on how strong is Europe, how strong is China, and that raises the question, ‘How confident are we that the economy is going to continue to grow at the pace we’ve seen in recent months?’”

Bats Global Markets withdrew its initial public offering after the six-year-old equity exchange priced the deal yesterday.

Pulling the IPO capped a day of missteps for the electronic exchange, beginning just as the shares were making their debut. Data received by Bloomberg around 11 a.m. in New York showed the stock, the first ever listed on its Lenexa, Kansas-based market, quoted at pennies after being priced yesterday at $16.

Around the same time, a transaction in Apple was executed on Bats so far away from the market price that it triggered a halt. A single trade for 100 shares executed on a Bats venue briefly sent Apple down to $542.80, according to data compiled by Bloomberg.

Bats sent a notice about 10 minutes before the Apple trade saying it was investigating “system issues” affecting companies with ticker symbols ranging between A and BF. Apple’s symbol is AAPL; Bats’s ticker is BATS. Apple finished regular trading down 0.6 percent at $596.05.

To contact the reporter on this story: 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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