Bloomberg News

U.S. Stocks Rise on GDP Data as Investors Await Bernanke

August 29, 2012

U.S. Stocks Little Changed as Investors Await Bernanke Speech

Rising fuel costs are hurting truckers along with the lack of shipment growth. Photographer: Daniel Acker/Bloomberg

U.S. stocks advanced, following a two-day decline in the Standard & Poor’s 500 Index, as the economy grew more than first estimated and investors awaited Federal Reserve Chairman Ben S. Bernanke’s speech in two days.

WellPoint Inc. (WLP:US) increased 7.7 percent after Angela Braly resigned as chairman and chief executive officer of the insurer. Yelp (YELP:US) Inc. surged 23 percent as investor confidence in its growth prospects prevailed after a ban lifted on stock sales by some of the largest investors in the online review website.

The S&P 500 added 0.1 percent to 1,410.49 at 4 p.m. New York time. The Dow Jones Industrial Average rose 4.49 points, or less than 0.1 percent, to 13,107.48. Volume for exchange-listed stocks in the U.S. was 4.4 billion shares, the lowest level since at least 2008 excluding days surrounding holidays.

“You are right in that narrow little lane where nothing needs to move at this point,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati. “People are actually waiting if anything comes out of Bernanke’s speech that is totally not expected. I don’t see any big initiative out of the Fed at this point. The economy is good enough that it’s not a disaster, yet it is slow enough that there’s no reason to crank up the anti-inflation machine.”

Gross domestic product climbed at a 1.7 percent annual rate from April through June, up from an initial estimate of 1.5 percent. Separate data showed Americans signed more contracts to purchase previously owned homes in July.

Beige Book

Bernanke may shed light on monetary policy in a speech to central bankers on Aug. 31 in Jackson Hole, Wyoming. The Fed today said the U.S. economy continued to expand “gradually” in July and early August. Most regional reserve banks reported employment was “holding steady or growing only slightly,” the Fed said in its Beige Book business survey.

The S&P 500 has risen 2.3 percent so far in August and is on pace for its third straight monthly advance. Technology, consumer discretionary and financial shares led the gains in the index, adding at least 3 percent and pacing advances among companies which are most-tied to the economy.

If history is any guide, the S&P 500 may extend gains next month, according to a Bespoke Investment Group study. Going back to 1928 (SPX), the index has returned an average 0.12 percent in September when it has been up year-to-date through August, the data showed. The measure has risen 12 percent so far in 2012.

WellPoint added 7.7 percent to $61.80. Braly, 51, was ousted after investors, some publicly, expressed discontent with her management. Over the past two weeks, Jackie Ward, WellPoint’s lead independent director, and a second board member met with shareholders to hear their concerns, according to a person familiar with the discussions.

180 Days

Yelp surged 23 percent to $22.37. Through yesterday, the stock had gained 22 percent since a March 1 initial public offering. Inside investors are eligible to sell about 53 million shares of the company 180 days after its IPO, a period that extended through yesterday.

Sealed Air Corp. (SEE:US) gained 12 percent to $14.58. The maker of Bubble Wrap hired Dow Chemical Co. executive Jerome Peribere to succeed Chief Executive Officer William V. Hickey, who plans to retire next year.

Jos. A. Bank Clothiers Inc. soared 14 percent to $47.44 after reporting second-quarter profit (JOSB:US) that topped analysts’ estimates as sales in its direct-marketing business climbed.

Mako Surgical Corp. (MAKO:US) surged 11 percent to $17.27 after a supplier said stocking orders for the company’s robotic orthopedic system’s debut have been completed.

Trucking companies are failing to show the kind of growth typical of an expanding U.S. economy, according to Christian Wetherbee, a Citigroup Inc. analyst.

‘Barely Positive’

Shipments by truckload carriers this month are “barely positive” by comparison with a year ago and little changed from July, Wetherbee wrote yesterday in a report. The companies ship entire tractor-trailers of goods on behalf of one customer.

The findings contrasted with the performance of a tonnage index compiled by the American Trucking Association. The index climbed 4.1 percent in July from a year ago, the 32nd straight monthly increase.

More than one company attributed August’s weakness to a faltering economy and doubts about the outcome of November’s presidential election, Wetherbee wrote. They added that the industry’s results for September might not be any better, according to the report.

Rising fuel costs are hurting truckers along with the lack of shipment growth, the New York-based analyst wrote. The daily national average price of diesel fuel exceeded $4 a gallon last week for the first time in three months, according to data from the American Automobile Association.

Wetherbee reduced third-quarter earnings estimates for Knight Transportation Inc., Swift Transportation Co. (SWFT:US) and Werner Enterprises Inc. by 1 cent a share to account for the worsening outlook. He maintained buy ratings on Knight and Werner and a neutral view of J.B. Hunt Transport Services Inc. and Swift.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • YELP
    (Yelp Inc)
    • $54.59 USD
    • 2.10
    • 3.85%
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