Bloomberg News

U.S. Stocks Rise as Jobless Claims Retreat to Three-Month Low

March 06, 2014

U.S. stocks rose, sending the Standard & Poor’s 500 Index to an all-time high, as data showed jobless claims fell to the lowest level in three months and investors watched developments in Ukraine.

Yum! Brands Inc. gained 3.3 percent after Robert W. Baird & Co. raised the stock’s rating. Pluristem Therapeutics Inc. climbed 4.2 percent after getting regulatory approval for manufacturing stem-cell therapy products. Costco Wholesale Corp. slipped 2.8 percent after posting fiscal second-quarter profit that missed analysts’ estimates. Staples Inc. plunged 15 percent after saying it will close as many as 12 percent of its North American stores.

The S&P 500 gained 0.2 percent to a record 1,877.03 at 4 p.m. in New York. The Dow Jones Industrial Average added 61.71 points, or 0.4 percent, to 16,421.89. About 6.5 billion shares changed hands on U.S. exchanges, in line with the three-month average.

“We need to get away from the latest noise and headlines and look at the fundamental trends in place,” Rob Stein, chief executive officer at Chicago-based Astor Investment Management, which manages $700 million, said by phone. “We’ve been adding jobs, GDP growth is positive, earnings are showing a positive trend, inflation is relatively low and while a lot of the stuff could be much, much better, the trend is still productive.”

The S&P 500 (SPX) fell less than one point yesterday as investors assessed weaker-than-estimated data on payrolls and services. The gauge rallied the most this year to close at a record on March 4 as concern eased that Russia’s intervention in the Crimean peninsula would lead to a broader conflict and disrupt markets.

Jobless Claims

Fewer Americans than projected filed applications for unemployment benefits last week, an indication companies are holding on to staff even as cold weather threatens to slow the world’s largest economy. The Labor Department will release its February jobs report tomorrow.

Separate data indicated factory goods orders in January fell 0.7 percent compared with a forecast for a decline of 0.5 percent.

The Federal Reserve said yesterday in its Beige Book business survey that the economy in most regions grew last month even as harsh winter weather impeded hiring. Investors have been speculating that recent weakness in data from housing to jobs was caused by inclement weather.

Three rounds of Fed stimulus have helped push the S&P 500 up 177 percent from a 12-year low, as U.S. equities are set to enter the sixth year of a bull market that started March 9, 2009.

ECB Rates

The European Central Bank kept interest rates unchanged at a record low of 0.25 percent today, as stronger inflation and economic output reduced the need for officials to take action. The decision was forecast by 40 out of 54 economists in a Bloomberg News survey.

President Barack Obama said the U.S. and its allies will keep raising pressure on Russia to back down in Ukraine and held open the possibility of further sanctions if Vladimir Putin’s government doesn’t respond. His administration earlier banned visas for Ukrainian officials and others, including Russians, who it says are threatening Ukraine’s sovereignty. Obama also authorized the imposition of financial sanctions.

Crimean lawmakers called a March 16 referendum to return Ukraine’s Black Sea peninsula to Russia. European Union governments halted trade and visa negotiations with Russia and prepared sanctions against selected Russian officials.

‘Still There’

“It’s one of those things that could come back and become the most important event at any time,” James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $360 billion in assets. “The concern is still there but it’s rapidly losing its focus. At least it’s gotten itself to a situation where it won’t have an affect economically until it flares up again.”

The tensions sent the Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, surging 14 percent on March 3. The VIX tumbled 12 percent the next day. The index rose 2.3 percent to 14.21 today.

Investors have added $9 billion to U.S. equity exchange-traded funds in the past five days and withdrawn $7.3 billion from bond ETFs, data compiled by Bloomberg show. Real-estate stocks absorbed the most money among industry ETFs, taking in nearly $900 million during the past week.

Financial Stocks

Seven of 10 main S&P 500 groups advanced. Financial shares rallied 0.7 percent to lead the gains and close at the highest level since September 2008. JPMorgan Chase & Co. jumped 1.3 percent to $58.90 for a third day of gains.

Yum climbed 3.3 percent to $77.29. Robert Baird analyst David Tarantino upgraded the stock’s rating to outperform, the equivalent of buy, from neutral, with a 12-month target price of $87 a share.

Sangamo Biosciences Inc. jumped 17 percent to $22.96 after the company said its experimental treatment lowered the amount of HIV in some AIDS patients.

Pluristem rose 4.2 percent to $4.23. The Food and Drug Administration gave its approval for the company to manufacture placenta-based cell therapies at its new production unit.

Pixelworks Inc. soared 88 percent to $9.00, the highest since October 2006. The semiconductor company’s sales to Apple Inc. represented more than 10 percent of its annual revenue, according to a March 5 regulatory filing. The previous year’s filing did not list the iPhone maker under customers that contribute at least 10 percent to total sales.

Biotech Slump

An index of pharmaceutical and biotechnology stocks fell 1 percent for the biggest drop among 24 S&P 500 groups. Actavis Plc slid 4.7 percent and Celgene Corp. dropped 4.1 percent for the steepest slides. The gauge is up 8.2 percent this year.

Costco Wholesale (COST:US) slipped 2.8 percent to $113.26. The largest U.S. warehouse-club chain said net income in the quarter ended Feb. 16 fell 15 percent to $1.05 a share from $1.24 a year earlier. Analysts projected profit of $1.17, the average of estimates compiled by Bloomberg.

Staples plunged 15 percent to $11.35 for the biggest drop in the S&P 500. The largest office-supplies chain will close as many as 225 stores in North America and reduce costs by as much as $500 million by the end of 2015, as it forecast sales to drop for a fifth consecutive quarter.

To contact the reporter on this story: Callie Bost in New York at cbost2@bloomberg.net

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


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Companies Mentioned

  • COST
    (Costco Wholesale Corp)
    • $124.76 USD
    • -0.56
    • -0.45%
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