BLBG: U.S. Stocks Rise as Consumer Confidence Gained in March
U.S. stocks rose, after the Standard & Poor’s 500 Index fell for two days, as data showed consumer confidence increased in March.
Walgreen Co. climbed 4.5 percent after saying it plans to close 76 drugstores and expects more synergies from its Alliance Boots business. Sonic Corp. (SONC) rallied 9.7 percent after the owner of drive-in restaurants posted second-quarter earnings that beat analysts’ estimates. Carnival Corp. declined 2.5 percent after it narrowed its full-year profit forecast.
The S&P 500 added 0.6 percent to 1,868.11 at 10:04 a.m. in New York. The Dow Jones Industrial Average increased 100.38 points, or 0.6 percent, to 16,377.07. Trading in S&P 500 stocks was 7.5 percent below the 30-day average during this time of the day.
“There is no doubt that the market is discounting the first quarter,” Tom Wirth, a senior investment officer for Chemung Canal Trust Co. in Elmira, New York, said in a telephone interview. The firm oversees $1.8 billion. “They know the weather is going to materially impact first-quarter GDP. It’s just wait and see until we see if there is truly accelerating strength in the economy.”
The S&P 500 (SPX) slid yesterday as economic data signaled a slowdown in American manufacturing and biotechnology shares slumped. The benchmark index reached an intraday record on March 21 as data indicated the economy is pulling out of a slowdown linked to unusually harsh winter weather.
Fed Stimulus
Three rounds of bond purchases from the Federal Reserve have helped fuel economic growth, sending the S&P 500 surging as much as 178 percent from its 2009 low. Fed Chair Janet Yellen said on March 19 that the central bank’s stimulus program could end this fall and benchmark interest rates may rise about six months later.
Fed Bank of Philadelphia President Charles Plosser said in an interview on CNBC today that the central bank wants to get back to normal policy, and that he doesn’t think the Fed changed its position on a rate rise.
The Conference Board’s index of U.S. consumer confidence rose to 82.3 in March from 78.3 a month earlier, the New York-based private research group said today. The median forecast in a Bloomberg survey of 76 economists called for a reading of 78.5 this month.
Housing Data
Another report showed purchases of new homes in the U.S. fell in February to the lowest level in five months, a sign the industry may take time to pick up after inclement weather damped demand earlier in the year.
Residential real-estate prices climbed at a slower pace in the year through January than a month earlier. The S&P/Case-Shiller index of property values in 20 cities increased 13.2 percent from January 2013, the smallest gain since August, after rising 13.4 percent in the 12 months through December.
Investors also watched developments on Ukraine. The world’s top industrial powers threatened further sanctions to deter Russian President Vladimir Putin from taking over other parts of Ukraine and suspended Russia from participating in the Group of Eight.
Meeting for the first time since last week’s annexation of Crimea by Russia, Group of Seven leaders said last night they won’t attend a planned G-8 meeting which was to have been held in Sochi, and will instead hold their own summit in June in Brussels.
Volatility Gauge
The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, fell 5.7 percent to 14.23. The index, also known as VIX, last week fell the most since February, sinking 16 percent.
Walgreen climbed 4.5 percent to $67.23. The owner of pharmacies said it plans to close the drugstores in the second half of fiscal 201. Synergies from its Alliance Boots business will reach as much as $425 million a year, the company said.
Sonic advanced 9.7 percent to $22.95. The company’s second-quarter adjusted profit of 7 cents a share beat the average analyst projection of 6 cents.
Carnival declined 2.5 percent to $38.99. The world’s largest cruise line operator narrowed its full-year profit forecast after lowering ticket prices to attract customers hesitant about incidents at sea.
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: Cecile Vannucci at cvannucci1@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net Jeff Sutherland, Jeremy Herron
