U.S. stocks rose, giving the Standard & Poor’s 500 Index its first back-to-back gain in more than three weeks, on optimism over earnings and as commodities gained amid a report showing China’s inflation slowed.
Raw-materials producers rose 1.1 percent amid speculation that tamed inflation would reduce pressure on Chinese policy makers to tighten credit. Microsoft Corp. and Intel Corp. rallied more than 3.1 percent as investors snapped up technology shares, the worst performing group this year. Alcoa Inc. was unchanged after posting earnings. J.C. Penney (JPM:US) Co. slumped 12 percent as it ousted Chief Executive Officer Ron Johnson and reinstated his predecessor, Myron E. Ullman III.
The S&P 500 rose 0.4 percent to 1,568.61 at 4 p.m. in New York. The Dow (INDU) Jones Industrial Average added 59.98 points, or 0.4 percent, to 14,673.46, its highest-ever closing level. About 5.8 billion shares changed hands on U.S. exchanges, 8 percent below the three-month average.
“The commodity pop is basically tied to the view on China,” Ralph Shive, the South Bend, Indiana-based manager of the $1.2 billion Wasatch-Large Cap Value Fund, said by phone. “The market is acting strongly. It doesn’t seem to want to go down. You get dips, and they seem to pop right back.”
The S&P 500 has gained 1 percent in the past two days as investors speculated first-quarter earnings would help equities rally. The benchmark index lost 1 percent last week, the biggest decline this year, amid reports showing U.S. payrolls had the smallest gain in nine months in March while manufacturing and services industries expanded less than forecast.
Income at S&P 500 companies probably fell 1.8 percent in the first quarter, the first year-over-year drop since 2009, analyst estimates compiled by Bloomberg show. JPMorgan Chase & Co., Wells Fargo & Co. and Bed Bath & Beyond Inc. are among S&P 500 companies scheduled to report earnings this week.
Alcoa, the first company in the Dow to release results this season, reported earnings that exceeded analysts’ estimates while revenue trailed projections. The company cited lower metal prices and the impact of smelter curtailments in Spain and Italy for the decline in sales. The shares swung between gains and losses of 1.3 percent today before closing unchanged at $8.39.
“Analyst estimates might be a little pessimistic at this point,” Eric Teal, chief investment officer at First Citizens BancShares Inc., which manages $4.5 billion in Raleigh, North Carolina, said in a phone interview. “Earnings will have the potential to surprise on the upside.”
A report from China showed inflation slowed last month from a 10-month high. In the U.S., inventories at wholesalers fell unexpectedly in February as uncertainty about fiscal policy kept business spending in check.
The S&P 500 has more than doubled from its 12-year low in March 2009, helped by the Federal Reserve’s unprecedented bond purchases and three straight years of profit growth.
Fed Chairman Ben S. Bernanke said in a speech yesterday that economic conditions were far from where he would like them to be. The Federal Open Market Committee releases minutes of its March 19-20 meeting tomorrow. After that meeting, Bernanke said further gains in the U.S. labor market were needed for the Fed to consider reducing its monetary easing.
The Chicago Board Options Exchange Volatility Index (VIX), which measures the cost of using options as insurance against declines in the S&P 500, fell 2.7 percent to 12.84 today. The gauge, known as the VIX, is down 29 percent this year and in March reached its lowest level since February 2007.
Seven of 10 S&P 500 groups advanced, led by raw-materials producers. Cliffs Natural Resources Inc. (CLF:US), the largest U.S. iron- ore miner, rallied 8.8 percent to $20.45. Freeport-McMoRan Copper & Gold Inc., the world’s second-biggest copper miner, rose 4.1 percent to $33.76.
U.S. Steel Corp. climbed 4.4 percent to $17.99 while Peabody Energy Corp., a coal producer, added 3.3 percent to $21.01. China is the biggest user of commodities from copper to coal.
Technology companies in the S&P 500 added 0.8 percent. The group has gained 2.8 percent this year, the worst performance among 10 industries. Microsoft, the world’s biggest software company, jumped 3.6 percent to $29.61 today. Intel, the largest chipmaker, rallied 3.1 percent to $21.75.
First Solar Inc. soared 46 percent, the most ever, to $39.35. The solar panel maker forecast 2013 sales (JCP:US) and earnings that exceeded analysts’ estimates as it begins to recognize revenue for its Desert Sunlight project in southern California.
J.C. Penney tumbled 12 percent to $13.93, its lowest level since 2001. The CEO’s departure comes after a dismal first year on the job for Johnson, who arrived with great fanfare after helping create Apple Inc.’s network of stores. Johnson tried to transform most of J.C. Penney’s locations into collections of boutiques and removed sales and coupons in favor of everyday low prices.
Sales in the year ended Feb. 2 plunged 25 percent to $13 billion, the lowest since at least 1987. Ullman, 66, served as J.C. Penney’s chairman and CEO for about seven years before Johnson, 54, took over.
Archer-Daniels-Midland Co., the world’s largest corn processor, dropped 1.8 percent to $32.73 after rival Cargill Inc. reported a 42 percent decline in quarterly profit amid the worst U.S. drought since the 1930s. Cargill is the largest closely held U.S. company.
Herbalife Ltd. slipped 3.8 percent to $36.95. The nutritional-supplements company said KPMG LLP resigned as its independent accountant after finding that a partner allegedly was involved in insider trading in its shares.
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