economic indicators

Stocks rise as home sales climb amid stimulus optimism

STOCKS ROSE IN THE U.S. on Monday as pending sales of homes climbed.
Posted 4/29/13

NEW YORK -- U.S. stocks rose, with the Standard & Poor’s 500 Index heading for its sixth straight month of gains, as pending sales of homes climbed amid optimism central banks will maintain stimulus plans.

Tenet Healthcare Corp. surged 7 percent as hospitals will get a pay raise from the U.S. government for treating patients in the Medicare program. Moody’s Investors Service Inc. and McGraw-Hill Cos. advanced at least 3 percent after a group of investors agreed to drop their claims against the companies. Actavis Inc. and Valeant Pharmaceuticals International Inc. rose more than 4.2 percent as people familiar with the situation said the companies are in merger talks that have stalled.

The S&P 500 rose 0.7 percent to 1,593.19 at 12:12 p.m. in New York. The gauge has climbed 1.5 percent in April, extending its longest streak of monthly gains since September 2009. The Dow Jones Industrial Average increased 84.94 points, or 0.6 percent, to 14,797.49 today. Trading in S&P 500 stocks was 21 percent below the 30-day average during this time of day.

“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.

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, figures from the National Association of Realtors showed today in Washington. Economists forecast a 1 percent increase, according to the median estimate in a Bloomberg survey.

Consumer spending

Separate data showed consumer spending rose more than projected in March. Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.7 percent gain the prior month, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 74 economists called for spending to be little changed. Incomes increased less than forecast and inflation cooled to the lowest level in more than three years.

The bull market in U.S. equities has entered its fifth year as the S&P 500 surged 135 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. The benchmark gauge for U.S. equities earlier today briefly rose above its record closing high of 1,593.37 reached on April 11.

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.

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, or VIX, fell 1.5 percent to 13.40. 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 26 percent this year.

All 10 S&P 500 industry groups advanced as technology and commodity companies climbed the most, rising at least 0.8 percent.

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