U.S. stocks climb for third day to further pare Brexit losses

NEW YORK – U.S. stocks climbed, with the S&P 500 Index on track for a quarterly advance, as markets showed further signs of stabilizing after wide swings in the wake of Britain’s decision to leave the European Union.

Consumer staples shares led an early climb bolstered by a 19 percent surge in Hershey Co.’s shares after a report that Mondelez International Inc. was said to have made a bid for the chocolate maker. Mondelez gained 1.8 percent. Utilities rose for a sixth day, the longest since March in a sign investors favored defensive assets even after the strongest two-day rally in four months.

The S&P 500 rose 0.4 percent to 2,079.84 at 10:53 a.m. in New York, adding to a 3.5 percent rebound in back-to-back sessions from a 15-week low. The Dow Jones Industrial Average increased 73.69 points, or 0.4 percent, to 17,768.37. The Nasdaq Composite Index added 0.3 percent. Trading volume in S&P 500 shares has diminished today from the heightened pace in the previous four sessions, running in line with the 30-day average for this time of day.

“Though it’s been a very swift and broad recovery, I do think investors will get more selective now,” said Justin Urquhart Stewart, London-based co-founder of Seven Investment Management, which oversees the equivalent of about $13 billion. “Central banks did well to react so quickly to the Brexit vote — that’s avoided any panic. But the path from here is very uncertain. You can justify a continued recovery for U.S. stocks because the timeline for tighter monetary policy was completely altered overnight.”

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A global rally lifted equities in the prior two days, returning the S&P 500 to an annual advance, as central banks reassured investors that they’re ready to increase stimulus after the U.K.’s vote. The outcome of the referendum had sparked a two-day selloff, the worst for the benchmark index in 10 months, that wiped as much as $3.6 trillion from stocks worldwide.

A fourth straight decline today for the CBOE Volatility Index pushed the measure of market turbulence known as the VIX to a three-week low. Still, investors remain on edge with Britain in limbo, preventing the country from entering talks to determine its future relationship with the EU as its leaders fight to see who will succeed David Cameron as prime minister. A majority of economists surveyed by Bloomberg predict the Bank of England will add more stimulus, including cutting rates this year.

BOE Governor Mark Carney will address the press and finance industry at 4 p.m. in London. Separately, St. Louis Fed President James Bullard is also scheduled to speak in the British capital later today.

“You should expect to see volatility and a market that struggles to repeat what we saw over the prior few days as uncertainty over the outcome persists,” Brian Levitt, senior investment strategist at OppenheimerFunds, said by phone. “I wouldn’t be surprised to see a market that limps into the weekend, and we’re unlikely to see a rally like we did over the past two days.”

While the turmoil interrupted the S&P 500’s march to an all-time high — a move propelled by optimism over a combination of low rates and moderate growth — it has also prompted traders to push back bets the Federal Reserve will raise borrowing costs any time soon. They now indicate a rate boost is unlikely before 2018. The S&P 500 remains about 2 percent below its June 23 level, after coming within 1 percent of a record twice this month.

The main U.S. equity gauge is down 0.9 percent in June, poised for its biggest monthly decline since January. That’s trimmed its third quarterly advance to 0.9 percent. Energy producers are the biggest gainers in the three-month period among the index’s 10 main industries, rebounding with crude after the commodity reached a 12-year low earlier this year.

Exxon Mobil Corp. and Chevron Corp. have helped bolster the benchmark since the end of March, with the two on track for a third quarterly gain, the longest since 2011. Exxon closed yesterday at a 16-month high.

At the opposite end, technology companies are poised for their worst quarter in 3 1/2 years, weighed by declines in heavyweights Microsoft Corp., Apple Inc. and Google parent Alphabet Inc. Disappointing earnings from those three tech giants sent their shares tumbling in April, taking the steam out of an equity rebound after the S&P 500 had rallied as much as 15 percent from a 22-month low in February.

While it’s still too early to see any tangible impact from Brexit in U.S. data, a report today showed the number of Americans who applied last week for unemployment benefits rose to a level that’s still consistent with steady improvement in the labor market.

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