U.S. stocks rose, giving the Standard & Poor’s 500 Index its first back-to-back weekly gain since April, amid speculation central banks will take steps to stimulate growth and contain a prolonged debt crisis in Europe.
All 10 S&P 500 groups advanced. JPMorgan Chase & Co. (JPM:US) surged 4 percent, pacing gains among financial companies, after Chief Executive Officer Jamie Dimon testified about his bank’s $2 billion trading loss. Cabot Oil & Gas Corp. (COG:US) jumped 9.7 percent as a rally in natural-gas prices helped lift energy shares. Johnson & Johnson (JNJ:US) climbed 4.8 percent after getting clearance for its Synthes Inc. acquisition. Facebook Inc. (FB:US) surged 11 percent, its first weekly increase since its May debut.
The S&P 500 rose 1.3 percent to 1,342.84 for the week, extending its 2012 advance to 6.8 percent. The Dow (INDU) Jones Industrial Average climbed 212.97 points, or 1.7 percent, to 12,767.17, building on the previous week’s 3.6 percent increase.
“I’m pretty convinced that they will keep throwing money at it and trying to buy more time” to tame the European crisis, Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview. His firm oversees $350 billion. “It means the Federal Reserve is going to have to have some liquidity event to keep the U.S. dollar from spiking substantially higher, and that in turn probably gives us another leg up in the stock market.”
Equities rose as signs of a global economic slowdown spurred speculation about stimulus measures. Policy makers from the U.K. to Japan and Canada stepped up warnings about the threat to financial (S5FINL) markets should Europe fail to contain its crisis. In the U.S., reports showing a decline in retail sales, industrial production and consumer confidence added to evidence of economic weakness before Federal Reserve policy makers meet June 19-20 to decide whether more stimulus is needed.
The Fed meeting follows Greek elections on June 17 that may determine whether the country upholds austerity measures attached to international aid and remains in the euro bloc. A victory by Syriza, the party that promises to renege on Greece’s end of the bailout deal, could speed the nation’s exit from the euro.
“Everyone is on the sideline because they are fearing if Greece decides to leave the euro, and it’s not orderly, that will create uncertainty and the market will get hammered,” Frank Ingarra, who helps manage $1.4 billion at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a June 14 phone interview.
Concern that Greece may leave the common currency helped drive the S&P 500 down 9.9 percent from this year’s peak on April 2 through June 1. The index then alternated between gains and losses for seven days starting June 6, a streak not seen since October, as investors shifted between optimism about further stimulus and concern over Europe’s debt crisis.
Financial companies in the S&P 500 climbed 1.9 percent as a group for the week. JPMorgan jumped 4 percent to $35.03. Dimon told the Senate Banking Committee that a switch to a new risk model in the first quarter may have helped fuel the $2 billion trading loss and the bank has shifted back to the old system.
Cabot Oil advanced 9.7 percent to $36.20, helping energy shares in the S&P 500 increase 2.5 percent. Natural-gas futures surged 14 percent on June 14, the most in 33 months, after the Energy Department said stockpiles rose less than analysts had estimated. Exxon Mobil Corp. (XOM:US) added 2.9 percent to $83.22.
J&J gained 4.8 percent, the most in the Dow, to $66.01. The world’s biggest health-care products company said its $19.7 billion purchase of Synthes, the largest acquisition in its 126- year history, will add 3 cents to 5 cents a share to 2012 earnings.
Facebook, which raised $16 billion in the May 17 initial public offering, advanced 11 percent to $30.01. The world’s largest social-networking company said it plans to introduce real-time bidding for advertising on its site, a technology used by Google Inc. and other Web companies to more effectively target ads to consumers. The stock slumped 29 percent in the previous three weeks amid concern ad revenue growth (FB:US) isn’t keeping pace with surging membership.
Edwards Lifesciences Corp. (EW:US) rallied 11 percent to $97.52. The company won the backing of Food and Drug Administration advisers for an expanded use of its Sapien heart valve as an alternative to open-heart surgery.
St. Jude Medical Inc. fell 8.8 percent, the most in the S&P 500, to $35.55. The company’s Durata, a wire used to connect life-saving defibrillators to the heart, was linked to a rare and dangerous defect in one patient in a report to U.S. regulators.
AK Steel Holding Corp. (AKS:US) sank 8.3 percent to $5.32. The fourth-largest U.S. steelmaker by shipments was cut to sell from neutral by Goldman Sachs & Co., which said there is “no relief in sight” for falling steel prices. The shares have lost 36 percent this year.
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