U.S. stocks rose, snapping a six- week decline, amid growing optimism that European leaders will reach a compromise on a financial rescue for Greece and leading American economic indicators will rebound.
JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) rose at least 1 percent, following gains in European banks. BJ’s Wholesale Club Inc. (BJ) rallied 3.8 percent as shareholders Leonard Green & Partners LP and CVC International made a proposal to buy the third-largest U.S. warehouse-club chain. Ciena Corp. (CIEN) added 1.1 percent after UBS AG raised its recommendation for the maker of network gear for the biggest U.S. phone companies.
The Standard & Poor’s 500 Index rose 1 percent to 1,279.81 at 9:33 a.m. in New York, erasing this week’s 0.3 percent drop through yesterday. The Dow Jones Industrial Average gained 95.82 points, or 0.8 percent, to 12,057.34 today.
“This may be an excellent entry point for stock investors,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion. “There are expectations that an agreement on Greece’s bailout may be reached. If we can get rid of the fears over Europe, it all comes down to -- do we believe the economy will reaccelerate in the second half of this year? If that’s the case, stocks have room to rally.”
The S&P 500 has fallen 7 percent from this year’s high at the end of April through yesterday. Equities slumped as reports showed business activity cooled more than forecast, sales of existing homes unexpectedly declined and growth in industrial production stopped. The decline threatened the 2011 gain for the S&P 500, which was up 0.8 percent through yesterday.
Global Stocks
Global stocks rose today as Chancellor Angela Merkel retreated from German demands that bondholders be forced to shoulder a “substantial” share of a Greek rescue, saying she’ll work with the European Central Bank to avoid disrupting markets.
“We would like to have a participation of private creditors on a voluntary basis,” Merkel told reporters in Berlin today at a joint press conference with French President Nicolas Sarkozy. This “should be worked out jointly with the ECB and there shouldn’t be any dispute with the ECB on this.”
Merkel and Sarkozy signaled a reconciliation between German calls for investors to help bail out Greece with warnings from the ECB and France that a compulsory move risked triggering the euro area’s first sovereign default. Attention now shifts to Athens, where Prime Minister George Papandreou overhauled his Cabinet to try and secure passage of austerity measures needed for a bailout.
Economic Data
In the U.S., the Conference Board’s gauge of the outlook for the next three to six months rose 0.3 percent after a 0.3 percent decline in April, according to the median of 51 forecasts in a Bloomberg News survey. Another report may show consumer confidence was little changed this month.
Banks rallied following gains in European peers. JPMorgan added 1.3 percent to $40.90. Citigroup rose 1.1 percent to $38.04. BJ’s Wholesale Club advanced 3.8 percent to $49.67. The Leonard Green buyout firm made the proposal with CVC Capital Partners, according to a regulatory filing today, which didn’t disclose the terms. Westborough, Massachusetts-based BJ’s began examining options in February, and Los Angeles-based Leonard Green expressed interest in a deal the next month.
Ciena added 1.1 percent to $17.45. The shares were raised to “neutral” from “sell” at UBS AG.
Research In Motion Ltd. (RIMM) tumbled 16 percent to $29.60. The maker of the Blackberry smartphone forecast second-quarter revenue and profit that missed analysts’ estimates and said it will cut jobs as a lack of new models prompts consumers to buy rival devices.
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
