Bloomberg News

U.S. Stocks Rise as S&P 500 Extends Record Amid Jobs Data

April 02, 2014

U.S. stocks rose a fourth day, with the Standard & Poor’s 500 Index extending a record, as data showing companies added to payrolls last month fueled optimism on growth in the economy.

Intuitive Surgical Inc. rose 5 percent to a 14-month high after JMP Securities LLC upgraded the stock’s rating. MannKind Corp. jumped 74 percent after its inhaled treatment for diabetes won the recommendation of a U.S. advisory panel. Apollo Education (APOL:US) Group Inc. slipped 8.8 percent after it received a subpoena from the Education Department for marketing and recruitment records.

The S&P 500 rose 0.3 percent to a record 1,890.90 at 4 p.m. in New York. The Dow Jones Industrial Average rose 40.39 points, or 0.2 percent, to 16,573, within four points of its all-time high set Dec. 31. The gauge briefly erased its loss for the year. About 6.2 billion shares changed hands on U.S. exchanges, 9.7 percent less than the three-month average.

“The positive tone from yesterday is most likely to continue into the jobs report, absent some big macro piece of data that comes out between now and then,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “Longer-term investors are still of the opinion that the U.S. equity market remains one of the best places to be invested for this year.”

The S&P 500 rose 0.7 percent yesterday to cap a third day of gains, the longest streak since February, as consumer and technology stocks pushed the gauge to a record and an index of manufacturing boosted optimism the economy withstood severe winter weather.

The equities benchmark trades at 17.5 times reported earnings, the highest level since 2010 and 11 percent above its five-year average, according to data compiled by Bloomberg.

Data Watch

Data today showed February factory goods orders rose 1.6 percent, topping an estimated advance of 1.2 percent. A separate report indicated companies in the U.S. boosted payrolls by 191,000 in March, according to figures from the ADP Research Institute in Roseland, New Jersey. The median forecast of 38 economists surveyed by Bloomberg called for a 195,000 advance.

The government’s monthly jobs numbers for March are due April 4.

Reports from hiring to factory output had shown weakness this year as freezing temperatures and mountains of snow kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders.

Fed Chair Janet Yellen said last week that “considerable slack” in the labor market is evidence that the central bank’s unprecedented accommodation will be needed for “some time” to put Americans back to work.

Investors also watched comments from Fed officials today to gauge the timing and pace of further cuts to stimulus.

Economic Slack

Fed Bank of St. Louis President James Bullard said in a Bloomberg Radio interview that a further slowing of inflation could prompt policy makers to suspend tapering of bond purchases, though he doesn’t expect that to happen.

Fed policy should remain accommodative “for quite some time” given “considerable amount” of economic slack that remains, Atlanta Fed President Dennis Lockhart said in a speech in Miami.

The central bank has cut $10 billion from its monthly bond buying in each of its past three meetings, leaving the total at $55 billion.

The Fed stimulus has helped propel the S&P 500 higher by as much as 180 percent from its bear-market low in March 2009. The equity gauge climbed 1.3 percent in the first three months of 2014, its fifth consecutive quarterly advance.

Sweet Spot

“Growth appears not too strong to feed the Fed’s hawks but neither too slow to question the recovery, re-emphasizing the sweet-spot concept -- which should be the most favorable environment for risky assets in 2014,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Asset Management in Copenhagen, wrote in an e-mail.

Investors have removed $3.7 billion from U.S. equity exchange-traded funds in the past five days and added $1.3 billion to bond ETFs, data compiled by Bloomberg show. Financial stocks saw the most money removed among industry ETFs, losing $489.2 million during the past week.

The Chicago Board Options Exchange Volatility Index (VIX), a gauge for U.S. stock volatility known as VIX, fell 0.1 percent to 13.09 for its fifth straight loss and the lowest level since January.

Eight of the 10 main S&P 500 industries advanced today. Consumer-discretionary stocks added 0.7 percent, for a fourth day of gains after a five-day losing streak.

Da Vinci

Intuitive Surgical Inc. rose 5 percent to $518.50, the highest since March 2013. The stock jumped 13 percent yesterday as the Food and Drug Administration cleared a major upgrade of the company’s da Vinci robotic surgery system. JMP Securities LLC upgraded its rating today to market outperform from market underperform.

MannKind surged 74 percent to $6.99. The biopharmaceutical company moved a step closer to getting its first product on the market after Food and Drug Administration advisers recommended that the FDA approve its Adfrezza drug for treating Type 1 and Type 2 diabetes. The agency doesn’t have to follow the panel’s recommendation.

Apollo Education slipped 8.8 percent to $32.06. The owner of the University of Phoenix said the department’s Office of the Inspector General demanded records going back to the beginning of 2007 relating to a centralized service center in Columbia, Maryland.

Alcoa Inc. slipped 1.5 percent to $12.85 after an analyst at Nomura Holdings Inc. said the stock’s recent outperformance is “unwarranted” and that there is “significant” downside risk to 2014 earnings per share. Cowen & Co. also said the stock is overvalued. Alcoa jumped 9.6 percent in March.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

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


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Companies Mentioned

  • APOL
    (Apollo Education Group Inc)
    • $33.94 USD
    • -0.13
    • -0.38%
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