BLBG: U.S. Stocks Increase As Data Spur Speculation On Fed
U.S. stocks rose as reports on inflation and jobless claims bolstered speculation the Federal Reserve will act to spur growth and investors awaited an election in Greece this weekend.
Home Depot Inc. (HD) and Intel Corp. (INTC) added more than 1.1 percent to pace advances among the biggest companies. Kroger Co. (KR), the largest U.S. grocery-store chain, climbed 3.4 percent after boosting its profit forecast and announcing a $1 billion share buyback. US Airways Group Inc. (LCC) jumped 4.2 percent after saying it expects “very strong” second-quarter and full-year results.
The Standard & Poor’s 500 Index gained 0.6 percent to 1,322.76 at 10:19 a.m. in New York. The Dow Jones Industrial Average advanced 83.78 points, or 0.7 percent, to 12,580.16 today. Trading in S&P 500 companies was down 22 percent from the 30-day average at this time of day.
“The worse the numbers are in the U.S., the greater the pressure the Federal Reserve will have to increase their monetization plan,” Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel Nicolaus & Co., which oversees about $115 billion of assets, said in a telephone interview. “There’s a modest amount of optimism that the Greek vote will bode well for the markets. Investors are sitting on their hands waiting for Sunday’s vote.”
Speculation grew that the Fed will discuss stimulus efforts at its meeting next week after reports showed jobless claims unexpectedly climbed by 6,000 to 386,000 last week and the cost of living fell by the most in more than three years.
Greece Elections
The S&P 500 fell yesterday as borrowing costs rose in Italy and Germany before elections in Greece amid concern that the Mediterranean nation will leave the euro area. The S&P 500 tumbled as much a 9.9 percent from a four-year high in April through June 1 amid lower-than-forecast economic data and concern Europe’s debt crisis was spreading. The index has rebounded 3.4 percent since.
Greeks head to the polls on June 17 after an inconclusive May 6 election that catapulted into second place a party opposed to budget-austerity accords tied to 240 billion euros ($301 billion) in international aid pledges received since May 2010.
Consumer discretionary and consumer staples shares had the biggest gains among 10 groups in the S&P 500. An S&P index of homebuilders jumped 2.4 percent, as Lennar Corp. surged 3.1 percent to $25.41 and PulteGroup Inc. added 2.9 percent to $8.65. Home Depot rose 2 percent to $52, while Intel increased 1.1 percent to $26.83.
Kroger Surges
Kroger surged 3.4 percent to $22.01. Profit for the year ending Jan. 31 will be as much as $2.40 a share, up from a prior forecast of as much as $2.38, the company said in a statement. Kroger also said its board approved a new $1 billion share buyback program, replacing an authorization that was exhausted on June 12.
US Airways jumped 4.2 percent to $12.47. The carrier said in a slide presentation on its website that it sees a “very strong” second quarter and full year.
Regions Financial Corp. (RF) gained 1.6 percent to $6.29. Shares of the regional bank holding company were raised to buy from neutral at Goldman Sachs Group Inc. by analyst Ryan Nash, who said a further recovery in real estate will drive both provisions and environmental costs lower.
To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
