S&P 500 rises to 5th quarterly gain as Fed signals support

NEW YORK – U.S. stocks climbed, with the Standard & Poor’s 500 Index poised for a fifth quarterly gain, as Federal Reserve Chair Janet Yellen signaled continued monetary support and tensions appeared to ease in Ukraine.

Biogen Idec Inc. advanced 3.8 percent after winning U.S. regulatory approval for a blood-disorder treatment. AT&T Inc. added 0.9 percent after approving a program to repurchase 300 million shares. General Motors Co. dropped 1.1 percent before its CEO testifies to Congress about the company’s vehicle recalls on Tuesday.

The S&P 500 gained 0.8 percent to 1,872.49 at 10:30 a.m. in New York, reversing a loss for March. A quarterly advance would give the gauge its longest streak since 2007. The Dow Jones Industrial Average rose 131.62 points, or 0.8 percent, to 16,454.68. The Nasdaq Composite Index jumped 1.1 percent, erasing its loss for the year.

“People thought the Fed was insinuating they were going to raise short-term interest rates sooner than anticipated,” Bruce Bittles, chief investment strategist at RW Baird & Co., said by telephone from Sarasota, Fla. His firm oversees $110 billion. “Yellen’s comments probably lay that to rest.”

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The S&P 500 fell 0.5 percent last week, trimming its gain in 2014 to 0.5 percent, as investors sold the bull market’s biggest winners to lock in gains as they assess how much of the recent economic weakness is weather-related and if the situation in Ukraine will worsen.

Considerable slack

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

“This extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policy makers at the Fed,” Yellen said.

She said March 19 that the central bank’s monthly bond purchases could end this fall and benchmark interest rates may rise about six months later. Fed Bank of Chicago President Charles Evans said March 28 that the central bank will probably increase interest rates in the second half of 2015.

Three rounds of central-bank bond purchases have helped the S&P 500 rally as much as 178 percent from its low in 2009. The gauge is up 1.3 percent this quarter.

“Yellen’s comments two weeks ago were taken with confusion, so she has an opportunity to calm things down today,” Veronika Pechlaner, who helps oversee $2.3 billion as investment manager at Jersey, Channel Islands-based Ashburton Ltd., said by phone. “Initially, her comments were seen as rather hawkish but it’s become clear since then from other members that that wasn’t the intention.”

Data watch

The Institute for Supply Management-Chicago Inc.’s business barometer fell to 55.9 from 59.8 in February. Economists surveyed by Bloomberg expected a drop to 59.5.

Separate reports this week may show that manufacturing in the world’s largest economy expanded further this month, while factory orders probably rebounded in February, according to economists’ forecasts in Bloomberg News surveys. The government’s monthly jobs report is scheduled for April 4.

Russia and the U.S. agree on the need for a diplomatic solution to tensions over Ukraine, Russian Foreign Minister Sergei Lavrov said on Sunday.

U.S. Secretary of State John Kerry said Russia must pull forces back from Ukraine’s border as both sides seek a diplomatic solution, while Lavrov urged the government in Kiev consider devolving power to give Ukraine’s regions more autonomy. The two top diplomats met Sunday in Paris.

Risk calmed

“If there was any geopolitical risk, it’s calmed down and we’re showing some economic momentum,” James Paulsen, chief investment strategist at Wells Capital Management, which manages about $360 billion, said by phone. “You take that combo package and say, do I really want to be short going into this jobs number? People are looking through the windshield and saying it looks like the economic data is going to pick up without weather distortion.”

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility known as VIX, retreated 2.8 percent to 14.01 and is little changed in March. Trading in S&P 500 shares was 12 percent below the 30-day average at this time of day.

All 10 of the main S&P 500 groups advanced on Monday. Technology and health-care stocks rose 1 percent to pace gains.

Micron Technology Inc. rallied 6.3 percent to $23.28 to lead technology stocks higher. The S&P 500 gauge of technology companies dropped 1.1 percent last week.

Hemophilia drug

Biogen Idec climbed 3.8 percent to $305.36 after its Alprolix drug to treat hemophilia B won approval from the Food and Drug Administration. The medicine may reduce the frequency of infusions required compared with current treatments, according to Executive Vice President Tony Kingsley.

Viacom Inc. added 1.2 percent to $85.71. The company’s “Noah” took in $44 million in its weekend debut, 7 percent higher than the $41 million projected by boxoffice.com.

General Motors lost 1.1 percent to $34.36. CEO Mary Barra will testify before a House Oversight and Investigations Subcommittee on Tuesday about why the company recalled vehicles years after becoming aware of an ignition-switch fault that led to about a dozen deaths.

GM, which says its engineers discovered the flaw in 2001, recalled 1.6 million automobiles last month.

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