BLBG: U.S. Equities Advance Amid Tiffany Earnings, Optimism on Greece
U.S. stocks advanced, after the Standard & Poor’s 500 Index’s worst decline in three weeks, amid optimism over progress in Greek talks and Tiffany & Co.’s better-than-forecast earnings.
Tiffany jumped 12 percent after posting quarterly profit that beat estimates. Airlines rose, snapping a five-day losing streak. Hormel Foods Corp. advanced 2.4 percent after the maker of Spam agreed to buy closely held Applegate Farms LLC. Michael Kors Holdings Ltd. tumbled 19 percent after its 2016 earnings forecast was short of projections.
The S&P 500 added 0.7 percent to 2,117.81 at 9:56 a.m. in New York, after falling 1 percent on Tuesday. The Dow Jones Industrial Average climbed 113.94 points, or 0.6 percent, to 18,155.48. The Nasdaq Composite Index rose 0.7 percent.
“After the selloff yesterday, we are going to take a bit of a breather,” said Chad Morganlander, a money manager in Florham Park, New Jersey, for Stifel, Nicolaus & Co., which oversees about $170 billion. “The U.S. dollar will continue to strengthen over the course of the next month and a half which will apply pressure to not only earnings but also economic data.”
The S&P 500 fell yesterday as better-than-forecast data and comments by Federal Reserve officials bolstered the case for a rate increase. The Chicago Board Options Exchange Volatility Index jumped 16 percent, only the second move all year to exceed 15 percent. By comparison, the VIX surpassed that four times in December.
Fed policy makers preparing to raise rates that they’ve held near zero since December 2008 are working to engineer a smooth tightening and avoid the volatility spurred by the so-called “taper tantrum” that roiled global markets, and sent the VIX soaring more than 50 percent in the late spring of 2013.
Fed Vice Chairman Stanley Fischer said Tuesday that policy makers will consider global growth as they begin to raise interest rates, and that they could increase borrowing costs more gradually should the world economy falter.
Economic Reports
Investors will watch reports on housing and consumer sentiment later this week for further clues on the timing of the rate increase. An estimate on Friday may also show the U.S. economy contracted in the first quarter, compared with a prior reading showing growth. Economists expect the Fed to raise borrowing costs in September, according to a Bloomberg survey.
“The problem is that we’re getting nothing from the corporate side to push markets higher or give the S&P 500 any direction,” Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG, said by phone from Bonn, Germany. “So investors have more of an eye on economic data and any word out of the Fed. People are a bit nervous about whether the Fed will get the timing right, but that’s still pretty hard to read.”
