Stocks rise to records amid consumer confidence, home data

NEW YORK – U.S. stocks rose, with the Standard & Poor’s 500 Index poised for its biggest annual advance since 1997, as data showed consumer confidence increased in December and housing prices jumped in October.

Hertz Global Holdings Inc. climbed 8.1 percent to an all-time high after saying it adopted a one-year shareholder-rights plan. Marvell Technology Group Ltd. rose 6 percent after KKR Fund Holdings disclosed a 6.8 percent stake in the chipmaker. Urban Outfitters Inc. fell 1 percent, extending its losses as the worst performer in an S&P 500 index of consumer-discretionary companies.

The S&P 500 added 0.3 percent to a record 1,847.21 at 12:36 p.m. in New York. The Dow Jones Industrial Average increased 57.60 points, or 0.4 percent, to 16,561.89, also an all-time high. Trading in S&P 500 stocks was 38 percent below the 30-day average at this time of day.

“The market is up primarily for two reasons,” Aaron Izenstark, co-founder of Iron Financial LLC in Northbrook, Ill., said by phone. “Obviously, you’ve got the consumer confidence data. It’s also the last trading day of the year, and typically it’s reasonably positive if there’s no negative news. As people and firms shore up books for the end of the year, typically the market drifts higher.”

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The S&P 500 has gained 2.3 percent in December, heading for its fourth straight monthly advance. The gauge climbed 3.7 percent from Dec. 13 through Dec. 27, its biggest two-week rally since July, as the Federal Reserve announced plans to reduce the pace of bond buying amid faster-than-estimated economic growth.

Annual gain

The equities benchmark has jumped 30 percent this year. Three rounds of Fed stimulus, known as quantitative easing, have sent the S&P 500 up 173 percent from a 12-year low in 2009.

Data on Tuesday showed the Conference Board’s index of consumer confidence in the U.S. rose to 78.1 in December from 72 in the prior month, the New York-based private research group said. The median projection in a Bloomberg survey of economists called for a reading of 76.

A separate report showed home prices in 20 U.S. cities rose in October from a year ago by the most in more than seven years, signaling the real-estate rebound will keep bolstering household wealth in 2014. The S&P/Case-Shiller index of property prices in 20 cities climbed 13.6 percent from October 2012, the biggest 12-month gain since February 2006, after a 13.3 percent increase in the year ended in September.

Dow dog

The Dow has rallied 26 percent this year, on pace for its best performance since 1995. International Business Machines Corp. is the only member of the 30-stock gauge headed for an annual decline, even as the world’s largest provider of computing services boosted its dividend and added about $20 billion to its buyback plan.

All 10 main industries in the S&P 500 have advanced this year, led by a 41 percent gain in consumer-discretionary companies. Phone companies have the weakest performance, with a 6.5 percent increase.

Equity returns will slow next year, Wall Street strategists forecast. The S&P 500 will end 2014 at 1,950, according to the average of 20 estimates compiled by Bloomberg. That represents a 5.6 percent gain over the next 12 months.

“I don’t think the market is overvalued, but will it continue this nice smooth ascent with almost no volatility?” Tobias M Levkovich, chief U.S. equity strategist at Citigroup Inc., said in an interview with Betty Liu on Bloomberg Television’s “In the Loop with Betty Liu.” “We will see a more volatile year that might scare off some investors, which might be good. Sentiment is getting way too positive. It’s beyond complacency.”

Volatility index

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, rose 1.8 percent to 13.80 on Tuesday. The gauge has dropped 23 percent this year, headed for the biggest annual slide since 2009.

All 10 main S&P 500 groups increased Tuesday, with energy and technology shares adding at least 0.6 percent to pace gains.

American Express Co. rose the most in the Dow, adding 1 percent to $90.52 for a ninth day of gains that extended an all- time high.

Hertz climbed 8.1 percent to $28.01. The largest publicly traded U.S. rental-car company adopted the plan after observing “unusual and substantial activity” in its stock. The board voted unanimously for the plan, which Hertz said wasn’t adopted in response to any specific takeover bid or proposal to acquire the company, according to a statement.

Marvell rises

Marvell Technology jumped 6 percent to $14.59. KKR Fund Holdings’ disclosure comes after two people familiar with knowledge of the matter said on Nov. 5 that KKR & Co. had acquired almost 5 percent of the computer chipmaker.

KKR sees the Hamilton, Bermuda-based company as undervalued and has discussed its holding with the company’s co-founders, CEO Sehat Sutardja and his brother Pantas, said one person, who asked not to be identified as the information is private.

Urban Outfitters fell 1 percent to $36.94. The clothing retailer has the only annual loss among consumer-discretionary shares in the index, dropping 6.2 percent this year.

Netflix Inc. has soared 295 percent in 2013 for the biggest gain in the S&P 500, as the world’s largest video-subscription company reported earnings that surged more than analysts forecast.

Micron Technology Inc. has rallied 244 percent this year, making it the second-best performer in the S&P 500. The chipmaker is projected to return to a profit in the fiscal year ending in August. Best Buy Co. has climbed 239 percent, rebounding after a 49 percent drop in 2012.

Newmont Mining Corp. has plunged 51 percent for the biggest annual loss in the S&P 500. The price of gold is down 28 percent in 2013, heading for its biggest decline in three decades. Cliffs Natural Resources Inc., the second-worst performer in the index, has lost 32 percent.

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