BLBG: U.S. Stocks Rise on Economy After S&P 500 Two-Day Drop
U.S. stocks climbed, with the Standard & Poor’s 500 Index trimming a weekly decline, as data showed household purchases rose the most in three months while consumer confidence dropped less than previously estimated.
Cognizant Technology Solutions Corp. rallied 3.7 percent after Morgan Stanley raised its recommendation on the stock. Zynga Inc. (ZNGA) climbed 1.8 percent after billionaire Steven A. Cohen increased his stake in the video-game publisher. PG&E Corp. fell 3.9 percent after saying it expects to face criminal charges for the 2010 explosion of one of its natural gas pipelines that killed eight people.
The S&P 500 added 0.7 percent to 1,861.44 at 9:57 a.m. in New York, paring its weekly drop to 0.2 percent. The Dow Jones Industrial Average rose 112.42 points, or 0.7 percent, to 16,376.65 today. Trading in S&P 500 stocks was 7.9 percent below the 30-day average during this time of the day.
“If consumers go back in and are confident enough to start spending again, that supports earnings and will certainly support the equity market,” Chris Gaffney, senior market strategist at EverBank Financial in St. Louis, said by phone.“I feel like we’re forming a base that we can move high now.”
The S&P 500 fell for the fourth time in five days yesterday, as banks and technology companies declined. The gauge has fallen 0.6 percent this month and is little changed for the quarter.
Investors have been selling the bull market’s biggest winners this week, locking in gains as they assess how much of the recent economic weakness is weather-related and if the situation in Ukraine will worsen.
Data Watch
Data today showed consumer spending in the U.S. rose in February by the most in three months as incomes increased. Americans were shaking off the effects of the coldest winter in four years as they ventured out to shop, supported by a job market that’s also picking up speed.
Separate data today indicated consumer confidence fell less than previously estimated in March.
Reports next week include data on hiring and manufacturing output in March, along with factory orders and construction spending from February.
“The market action from this week and last week shows that equities seem to be marking time before quarter-end and next week’s economic data,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, which oversees $115 billion, said by phone. “Investors are still taking a wait-and-see attitude. Our thesis is still in tact that the market trends higher.”
Ukraine Tensions
U.S. President Barack Obama today urged Russia to pull back troops from Ukraine’s border while Russia dismissed a United Nations resolution on its takeover of Crimea as “counter-productive.”
Health-care and consumer-discretionary stocks led gains today, as nine of the 10 main S&P 500 groups advanced. Merck & Co. rallied 1.6 percent and UnitedHealth Group Inc. jumped 1.5 percent.
Technology stocks added 0.8 percent, cutting a decline for the week to 0.7 percent. Microsoft surged 2.5 percent to $40.36.
Cognizant Technology Solutions Corp. gained 3.7 percent to $49.32. The provider of consulting and outsourcing services was boosted to overweight, an equivalent of buy, by Morgan Stanley, The company’s growth potential may have been underestimated, analyst Katy Huberty wrote in a note.
Zynga gained 1.8 percent to $4.55. Cohen increased his stake to 5.3 percent from 2.2 percent as of year-end. The leader of SAC Capital Advisors LP controls 38.7 million shares, according to a regulatory filing yesterday, a holding valued at almost $173 million based on market prices.
Restoration Hardware (RH) Holdings Inc. advanced 13 percent to $72.40. The home-furnishings retailer forecast that adjusted profit will be between 9 cents a share and 11 cents in the first quarter, compared with analysts’ estimates for 6 cents. It said annual profit will be as much as $2.22 a share, beating the average projection for $2.18.
PG&E fell 3.9 percent to $41.94. Charges to be filed by the U.S. Attorney’s office will accuse the company of violating the federal Pipeline Safety Act, leading to the explosion and deaths, according to a company statement. PG&E didn’t say when it expects the charges to be filed, and said it believes they aren’t merited.
To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Callie Bost in New York at cbost2@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron, Jeff Sutherland
