BLBG: U.S. Stocks Rebound as Japan Plans to Double Bond Buying
U.S. stocks rose, after yesterday’s biggest selloff for the Standard & Poor’s 500 Index in more than a month, as the Bank of Japan doubled its bond purchases to help drive the world’s third-largest economy.
Facebook Inc. rose 0.8 percent after the company was said to be preparing a deeper push into smartphone software with a modified version of Google Inc.’s operating system. Brinker International Inc. gained 1.9 percent after Raymond James Financial Inc. raised its rating on the full-service restaurant company. Microsoft Corp. fell 0.6 percent after Bank of America Corp. downgraded the shares for the first time since 2008.
The S&P 500 gained 0.4 percent to 1,560.01 at 9:53 a.m. in New York. The Dow Jones Industrial Average rose 55.49 points, or 0.4 percent, to 14,605.84 today. Trading among S&P 500 shares was 6.7 percent below the 30-day average at this time of day.
“Expectations were high for the Bank of Japan and they managed to exceed expectations,” Janelle Nelson, a Minneapolis- based portfolio analyst with RBC Wealth Management’s portfolio advisory group, said in a phone interview. Her firm manages about $315 billion in client assets. “The big issue for investors will be what the U.S. employment report shows tomorrow.”
Equities climbed today after the Bank of Japan strengthened a stimulus program that will see the central bank buy 7 trillion yen ($73 billion) of bonds a month. European Central Bank officials meeting in Frankfurt left interest rates on hold. ECB President Mario Draghi signaled the bank will keep monetary policy loose for an extended period and that further easing is possible if economic conditions deteriorate.
Fed Stimulus
The bull market in equities entered its fifth year last month, with the S&P 500 more than doubling from its bottom in 2009, as corporate earnings topped estimates and the Federal Reserve carried out an unprecedented three rounds of bond purchases to spur the economy. The S&P 500 and Dow closed at all-time highs on April 2.
Jobless claims rose by 28,000 to 385,000 in the week ended March 30, the highest since Nov. 24, Labor Department figures showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 353,000. Before adjusting for seasonal variations, claims fell by almost 1,600.
The S&P 500 slid 1.1 percent yesterday, the most in more than a month, as a report from ADP Research Institute showed companies boosted employment by 158,000 workers in March, below economists’ forecasts calling for a 200,000 gain.
Jobs Data
The jobs data come before tomorrow’s non-farm payrolls report from the Labor Department, which may show employers hired a net 195,000 workers for the month, according to the median forecast of 87 economists surveyed by Bloomberg.
Investors will begin to focus on first-quarter earnings reports beginning next week, with Alcoa Inc. scheduled on April 8 to be the first company in the Dow to report results. Profits among S&P 500 companies are forecast to decline 1.9 percent for the period, for the first retreat since 2009, according to estimates compiled by Bloomberg. In January, analysts forecast earnings growth of 1.2 percent. Profit expanded by 8 percent in the fourth quarter of 2012.
Facebook Gains
Facebook rose 0.8 percent to $26.45 today after people with knowledge of the plans said the company is planning new software that will prominently feature its social-networking tools. Facebook will probably announce a handset running the operating system today, according to Carl Howe, an analyst at Yankee Group.
Brinker International added 1.9 percent to $38.40 after it was raised to the equivalent of a buy from a hold rating by Raymond James equity analyst Bryan Elliott. The 12-month target price is $42 a share.
Microsoft (MSFT) fell 0.6 percent to $28.39 after Bank of America lowered its recommendation for the world’s largest software maker to neutral from buy, citing a lack of momentum from the introduction of Windows 8 six months ago.
To contact the reporters on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
