BLBG: U.S. Stocks Gain After GE Says Rating Cut Won’t Hurt Business
U.S. stocks advanced for the third straight day as General Electric Co. said the loss of the top credit rating at Standard & Poor’s won’t hurt business and retail sales beat estimates in January and February.
GE added 8.5 percent after losing the AAA grade that it held since 1956, while Bank of America Corp. and JPMorgan Chase & Co. gained more than 4.1 percent. Wal-Mart Stores Inc. rose 1.1 percent after government retail sales data indicated the biggest part of the economy is stabilizing. Pfizer Inc. rallied 4.5 percent following success in a drug trial.
“The market anticipates such dire consequences, so it’s turned into sell the rumor buy the news,” said Steve Sosnick, equity risk manager at Interactive Brokers Group Inc. in Greenwich, Connecticut. “With GE the fear was they’d lose their credit rating and they did, but S&P switched the outlook to stable so that’s seen as positive.”
The S&P 500 Index increased 0.9 percent to 727.81 at 10:38 a.m. in New York after losing as much as 0.9 percent. The Dow Jones Industrial Average climbed 55.27 points, or 0.8 percent, to 6,985.67. The Russell 2000 Index of small companies climbed 1.1 percent to 370.47. The MSCI World Index of 23 developed markets slumped 0.1 percent to 729.92.
U.S. stocks gained the past two days after JPMorgan and Citigroup Inc. said they were profitable in January and February, rebounding from the worst year for financial institutions since the Great Depression. The S&P 500 surged 6.4 percent on March 10 in the biggest rally since November.
Unexpected Gain
Futures on the S&P 500, which had declined as much as 1.3 percent, rebounded after the Commerce Department said retail sales decreased by 0.1 percent, less than the 0.5 percent slump forecast by economists, and January’s gain was almost double the previous estimate. Excluding automobiles, February sales unexpectedly climbed 0.7 percent.
GE rose 8.5 percent to $9.21. The company “does not anticipate any significant operational or funding impacts” from the credit downgrade, according to a statement. Its long-term debt rating was cut one level to AA+ with a “stable” outlook.
Bank of America rallied 6.9 percent, and JPMorgan rose 4.1 percent to $21.24.
Wal-Mart, the world’s biggest merchant, added 1.1 percent to $47.98 following the government’s retail sales report.
Pfizer Inc. led a gauge of 54 health-care companies in the S&P 500 to a 2.4 percent gain, for the biggest advance among 10 industries. Its cancer drug Sutent showed “significant benefit” in patients with a form of pancreatic tumor, the company said.
Pfizer added 4.5 percent to $13.36.
CV Therapeutics Inc. climbed 27 percent to $20.39 and earlier rallied to $20.68, the highest intraday price since April 2006. Gilead Sciences Inc. agreed to buy the company, which develops drugs for the treatment of cardiovascular diseases, for about $1.4 billion, or $20 a share.
