Bloomberg News

S&P 500 Climbs to Record on Home Sales, Stimulus Optimism

April 29, 2013

U.S. stocks rose, with the Standard & Poor’s 500 Index advancing to a record high, as pending sales of homes climbed amid optimism central banks will maintain stimulus plans.

Apple Inc. jumped 3.1 percent to pace a rally in technology shares. Tenet Healthcare Corp. surged 6.5 percent as hospitals will get a pay raise from the U.S. government for treating Medicare patients. Actavis Inc. (ACT:US) and Valeant Pharmaceuticals International Inc. rose more than 3.8 percent as the companies are said to have been in merger talks. Moody’s Corp. gained the most in the S&P 500 after being part of a settlement with investors claiming inflated ratings.

The S&P 500 rose 0.7 percent to 1,593.61 at 4 p.m. in New York, topping a record close of 1,593.37 reached on April 11. The Dow Jones Industrial Average increased 106.20 points, or 0.7 percent, to 14,818.75 today. More than 5.1 billion shares traded hands today on U.S. exchanges, or 19 percent below the three- month average.

“There’s just a positive tone to the market in part because recent lackluster economic trends have reinforced investors belief that the Federal Reserve will continue to press on the gas pedal,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $130 billion, said by telephone.

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The S&P 500 has climbed 1.6 percent in April, poised for its sixth straight month of gains, the longest streak of advances since September 2009. The bull market in U.S. equities has entered its fifth year as the S&P 500 surged 136 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of monetary stimulus from the Federal Reserve.

Central Banks

The European Central Bank will cut its benchmark interest rate to a record low of 0.5 percent on May 2, according to the majority of economists in a Bloomberg survey, while the Fed may consider renewing its commitment to bond-buying at a two-day meeting starting tomorrow.

Equities rose today as figures from the National Association of Realtors showed the index of pending home sales increased 1.5 percent after a revised 1 percent decline the prior month that was larger than initially reported. Economists forecast a 1 percent increase, according to the median estimate in a Bloomberg survey.

Separate data showed consumer spending rose more than projected in March. Incomes increased less than forecast and inflation cooled to the lowest level in more than three years.

Corporate Earnings

Nine S&P 500 companies report earnings today, including Express Scripts Holding Co. and Loews Corp. Of the 273 companies that have reported earnings so far this month, 74 percent exceeded analysts’ profit predictions, while 55 percent missed sales estimates, data compiled by Bloomberg show.

“We feel visibility on earnings is pretty darn good,” Paul Mangus, head of equity research and strategy at Wells Fargo Private Bank in Charlotte, North Carolina, said in a phone interview. His firm oversees $170 billion. “We are seeing some indications that earnings momentum is likely to pick up in future quarters.”

The Chicago Board Options Exchange Volatility Index (VIX), or VIX, rose 0.7 percent to 13.71. The gauge for options that are used to protect against losses in the S&P 500 reached a six-year low in March and is down 24 percent this year.

All 10 S&P 500 industry groups advanced as technology and commodity companies climbed the most, rising at least 0.9 percent. Apple jumped 3.1 percent, the most since Feb. 5, to $430.12. Microsoft Corp. surged 2.6 percent to $32.61 and Google Inc. increased 2.2 percent to $819.06. Hewlett-Packard Co. added 2.7 percent, the most in the Dow, to $20.50 and International Business Machines Corp. gained 2.5 percent to $199.15.

Hospitals Rally

Tenet, the third-largest U.S. hospital company, jumped 6.5 percent to $43.84. HCA Holdings Inc., the largest publicly traded chain, climbed 5.5 percent to $40.37.

The U.S. Centers for Medicare and Medicaid Services plans to raise payments 0.8 percent beginning Oct. 1 for services that elderly and disabled patients receive after being admitted to hospitals, according to a regulatory proposal.

Moody’s climbed 8.3 percent to $59.69, the highest in almost six years. McGraw-Hill Cos., owner of Standard & Poor’s, advanced 2.8 percent to $53.45. Investors led by Abu Dhabi Commercial Bank and King County, Washington, agreed to drop their lawsuits claiming that the companies gave inflated grades on two structured investment vehicles.

Morgan Stanley rose 3.8 percent to $22.21 after settling claims brought by the investor group that it had acted negligent in conveying ratings that it should have known were inaccurate.

Airlines Jump

The Bloomberg U.S. Airlines Index (BUSAIRL) rallied 1.1 percent. United Continental Holdings Inc. increased 2.8 percent to $32 while Delta Air Lines Inc. rose 0.8 percent to $16.95.

The U.S. House passed legislation to end air-traffic controller furloughs, joining the Senate in letting the Federal Aviation Administration work around across-the-board budget cuts to end days of flight delays.

Actavis (ACT) rose 4.6 percent to $105.58 and Valeant added 3.8 percent to $75.94. The generic-drug makers had sought to announce a merger as soon as today before Actavis balked at the premium offered by Valeant, said a person familiar with the matter, who asked not to be identified because the discussions aren’t public. The Financial Times reported April 27 that the talks had stalled.

Biogen, Disney

Biogen Idec (BIIB) Inc. climbed 4.7 percent to a record $223.61. The introduction of the company’s multiple sclerosis pill, Tecfidera, outstripped the initial sales of competing drugs from Novartis AG and Sanofi, suggesting the treatment may beat estimates for the year. Total prescriptions more than doubled during the third week of the launch to 730 from 332 the previous week, according to a Wells Fargo & Co. report.

Walt Disney Co. climbed 1.8 percent to $63, a record high. The world’s largest entertainment company was boosted to buy from neutral by UBS AG.

Conceptus (CPTS) Inc. surged 20 percent to a record $30.96. The maker of a permanent contraception device agreed to be bought by Bayer AG for about $1.1 billion in cash, or $31 a share.

Roper Industries Inc. (ROP:US) fell 3.8 percent to $118.68. The maker of products from medical imaging to refrigeration valves forecast second-quarter earnings of no more than $1.30 a share. That trailed the average analyst estimate of $1.38 in a Bloomberg survey.

Eastman Chemical Co. (EMN:US) slipped 1 percent to $68.27 after JPMorgan Chase & Co. cut the stock’s rating to neutral from overweight.

Expedia Inc. declined 4.3 percent, the most in the S&P 500, to $56.06. The stock has slumped 14 percent since lowering its 2013 earnings forecast on April 25, leaving it poised for the biggest two-day drop since 2011.

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

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


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Companies Mentioned

  • ACT
    (Actavis plc)
    • $237.93 USD
    • 0.84
    • 0.35%
  • ROP
    (Roper Industries Inc)
    • $150.23 USD
    • 0.60
    • 0.4%
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