U.S. stocks advanced, with benchmark indexes trading near all-time highs, as companies from Apple Inc. to Time Warner Inc. and Intel Corp. rallied amid deals and earnings reports.
Time Warner surged 18 percent as Rupert Murdoch’s 21st Century Fox Inc. made a takeover bid that was rebuffed. Intel gained 8.3 percent as its third-quarter sales forecast fueled optimism the personal-computer market is emerging from a two-year slump. Apple and International Business Machines Corp. rose at least 0.7 percent after agreeing to develop applications for corporate users of wireless devices.
The Standard & Poor’s 500 Index (SPX) added 0.4 percent to 1,980.69 at 3:06 p.m. in New York. The Dow Jones Industrial Average increased 64 points, or 0.4 percent, to a record 17,124.68. The Russell 2000 Index of smaller companies fell 0.2 percent, after slumping 1 percent yesterday amid Federal Reserve concerns over valuations. Trading in S&P 500 companies was 38 percent above the 30-day average for this time of day.
“You’re starting to see the economy and leading indicators move in the direction that most people expected to start the year,” Chris Hyzy, chief investment officer of U.S. Trust in New York, said in a phone interview. That’s leading to better-than-forecast earnings for economically sensitive companies, he said, while increased merger activity is “emblematic of a corporate sector that has more comfort in the next couple of years.”
The S&P 500 has rallied 7.2 percent this year amid better-than-estimated corporate earnings and central bank stimulus. The U.S. economy is showing signs of recovering from a 2.9 percent contraction in the first quarter.
Economic Data
Data today showed U.S. industrial production climbed 0.2 percent in June, capping the strongest quarter in almost four years and indicating manufacturers are providing a bigger spark for the U.S. economy. A separate report indicated that wholesale prices in the U.S. rose more than forecast in June, reflecting a jump in energy costs that is now abating.
The Federal Reserve said in its Beige Book business survey released today that economic growth was modest to moderate in the latest period as all 12 of its districts reported stronger consumer spending and expanded manufacturing.
Equity futures rose early in the day as a report showed China’s economic growth accelerated for the first time in three quarters. Gross domestic product rose 7.5 percent in the April-June period from a year earlier, beating the 7.4 percent median estimate in a Bloomberg News survey of economists.
Internet Stocks
The Russell 2000 (RTY) fell 1 percent yesterday after the Fed said valuations for smaller social-media and biotechnology companies are substantially stretched. Small-caps and Internet shares were the biggest victims of a market retreat earlier this year as investors dumped the best performers of the bull market amid concern valuations advanced too far.
The Dow Jones Internet Composite Index slid 0.4 percent today, trimming a decline of 0.8 percent from earlier in the day. Yahoo! Inc. fell 4.8 percent as the U.S. Web portal reported second-quarter earnings and sales that fell short of analysts’ estimates.
The Nasdaq Biotechnology Index declined 1.3 percent after tumbling 2.3 percent yesterday.
Stocks briefly pared gains after Leon Cooperman, chief executive officer of hedge fund Omega Advisors Inc., said the U.S. market was fully valued. He said at the CNBC Institutional Investor Delivering Alpha Conference that financials were one of the cheaper groups among equities.
Yellen Testimony
Fed Chair Janet Yellen said today she sees “no alarming warning signals” on asset values. In response to questions at the House Financial Services Committee, she said the Fed doesn’t take a view on what equity prices should be, and only looks at whether values are rising “outside historic norms.”
Yellen said yesterday in testimony to the Senate Banking Committee that the central bank must press on with monetary stimulus as “significant slack” remains in labor markets and inflation is still below the Fed’s goal.
Three rounds of Fed bond-buying have helped propel the S&P 500 higher by more than 190 percent during the current five-year bull market.
“I think Yellen might have derailed a few things yesterday, but today it’s back to earnings again and rightfully so,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “Earnings season is a big deal and you have a couple of big names that have looked good with many, many to come.”
Earnings Season
Fourteen companies in the S&P 500 including EBay Inc. and Yum! Brands Inc. are reporting second-quarter results today. Profit by the gauge’s members increased 4.5 percent in the quarter, and revenue rose 3.1 percent, according to estimates compiled by Bloomberg.
Intel climbed 8.3 percent, the most in the Dow. The PC market has shown signs of improvement this year as corporate spending picked up and U.S. shipments returned to growth. Intel’s outlook indicates demand is starting to recover among consumers, who may be buying laptops and desktops again after years of opting for smartphones and tablets instead.
Intel also added $20 billion to its stock-repurchase program, including $4 billion planned for the third quarter.
Time Warner surged 18 percent to $83.58 for the largest gain in the S&P 500. 21st Century Fox made an $80 billion takeover bid in recent weeks for Time Warner that was rebuffed, the New York Times reported, citing people briefed on the matter whom it didn’t identify. Fox indicated that it would sell CNN to ward off potential antitrust concerns since Fox News competes directly with CNN, the newspaper said.
Time Warner
Fox confirmed the proposal. The company is prepared to offer more than $85 a share for Time Warner, according to a person with knowledge of the matter. Fox shares fell 5.7 percent.
“This M&A just seems to have taken off, not that it was dead before, it just seems to be almost a daily event,” said Timothy Ghriskey, chief investment officer at New York-based Solaris Asset Management LLC, in a phone interview. “A bid for something like Time Warner, that’s big news. A takeover environment creates a lift to the markets. Everyone is looking for the next big name.”
Apple rose 0.7 percent and IBM gained 2 percent. The deal enables the iPhone maker to expand beyond individual customers and add more corporate clients through IBM’s sales force. IBM gets a boost in its effort to sell software and services to companies seeking to manage workers’ wireless devices.
GE, IGT
International Game Technology jumped 9.7 percent. Rome-based Gtech SpA agreed to buy the world’s biggest slot-machine maker for $4.7 billion.
General Electric Co. rallied 1.5 percent. The company is in talks with potential acquirers about selling its century-old household appliances business, said people familiar with the matter.
Bank of America Corp. dropped 1.9 percent. The second-biggest U.S. bank said profit declined 43 percent as it spent $4 billion to cover litigation costs, including a mortgage settlement with American International Group Inc.
Seven of 10 main industries in the S&P 500 advanced today. Energy companies increased 1.4 percent for the largest gain. Technology shares jumped 1.1 percent. Financial shares dropped 0.2 percent and health-care companies lost 0.5 percent.
The S&P Supercomposite Homebuilding Index rose 1.8 percent. Homebuilder confidence in July rose more than forecast to the highest level in six months as growing payrolls brightening the outlook. PulteGroup Inc. and D.R. Horton Inc. climbed more than 1.4 percent.
The Chicago Board Options Exchange Volatility Index fell 6.4 percent to 11.19. The gauge known as the VIX (VIX) jumped 17 percent last week for its biggest rally in three months, after closing July 3 at the lowest since 2007.
source: Bloomberg
Time Warner surged 18 percent as Rupert Murdoch’s 21st Century Fox Inc. made a takeover bid that was rebuffed. Intel gained 8.3 percent as its third-quarter sales forecast fueled optimism the personal-computer market is emerging from a two-year slump. Apple and International Business Machines Corp. rose at least 0.7 percent after agreeing to develop applications for corporate users of wireless devices.
The Standard & Poor’s 500 Index (SPX) added 0.4 percent to 1,980.69 at 3:06 p.m. in New York. The Dow Jones Industrial Average increased 64 points, or 0.4 percent, to a record 17,124.68. The Russell 2000 Index of smaller companies fell 0.2 percent, after slumping 1 percent yesterday amid Federal Reserve concerns over valuations. Trading in S&P 500 companies was 38 percent above the 30-day average for this time of day.
“You’re starting to see the economy and leading indicators move in the direction that most people expected to start the year,” Chris Hyzy, chief investment officer of U.S. Trust in New York, said in a phone interview. That’s leading to better-than-forecast earnings for economically sensitive companies, he said, while increased merger activity is “emblematic of a corporate sector that has more comfort in the next couple of years.”
The S&P 500 has rallied 7.2 percent this year amid better-than-estimated corporate earnings and central bank stimulus. The U.S. economy is showing signs of recovering from a 2.9 percent contraction in the first quarter.
Economic Data
Data today showed U.S. industrial production climbed 0.2 percent in June, capping the strongest quarter in almost four years and indicating manufacturers are providing a bigger spark for the U.S. economy. A separate report indicated that wholesale prices in the U.S. rose more than forecast in June, reflecting a jump in energy costs that is now abating.
The Federal Reserve said in its Beige Book business survey released today that economic growth was modest to moderate in the latest period as all 12 of its districts reported stronger consumer spending and expanded manufacturing.
Equity futures rose early in the day as a report showed China’s economic growth accelerated for the first time in three quarters. Gross domestic product rose 7.5 percent in the April-June period from a year earlier, beating the 7.4 percent median estimate in a Bloomberg News survey of economists.
Internet Stocks
The Russell 2000 (RTY) fell 1 percent yesterday after the Fed said valuations for smaller social-media and biotechnology companies are substantially stretched. Small-caps and Internet shares were the biggest victims of a market retreat earlier this year as investors dumped the best performers of the bull market amid concern valuations advanced too far.
The Dow Jones Internet Composite Index slid 0.4 percent today, trimming a decline of 0.8 percent from earlier in the day. Yahoo! Inc. fell 4.8 percent as the U.S. Web portal reported second-quarter earnings and sales that fell short of analysts’ estimates.
The Nasdaq Biotechnology Index declined 1.3 percent after tumbling 2.3 percent yesterday.
Stocks briefly pared gains after Leon Cooperman, chief executive officer of hedge fund Omega Advisors Inc., said the U.S. market was fully valued. He said at the CNBC Institutional Investor Delivering Alpha Conference that financials were one of the cheaper groups among equities.
Yellen Testimony
Fed Chair Janet Yellen said today she sees “no alarming warning signals” on asset values. In response to questions at the House Financial Services Committee, she said the Fed doesn’t take a view on what equity prices should be, and only looks at whether values are rising “outside historic norms.”
Yellen said yesterday in testimony to the Senate Banking Committee that the central bank must press on with monetary stimulus as “significant slack” remains in labor markets and inflation is still below the Fed’s goal.
Three rounds of Fed bond-buying have helped propel the S&P 500 higher by more than 190 percent during the current five-year bull market.
“I think Yellen might have derailed a few things yesterday, but today it’s back to earnings again and rightfully so,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “Earnings season is a big deal and you have a couple of big names that have looked good with many, many to come.”
Earnings Season
Fourteen companies in the S&P 500 including EBay Inc. and Yum! Brands Inc. are reporting second-quarter results today. Profit by the gauge’s members increased 4.5 percent in the quarter, and revenue rose 3.1 percent, according to estimates compiled by Bloomberg.
Intel climbed 8.3 percent, the most in the Dow. The PC market has shown signs of improvement this year as corporate spending picked up and U.S. shipments returned to growth. Intel’s outlook indicates demand is starting to recover among consumers, who may be buying laptops and desktops again after years of opting for smartphones and tablets instead.
Intel also added $20 billion to its stock-repurchase program, including $4 billion planned for the third quarter.
Time Warner surged 18 percent to $83.58 for the largest gain in the S&P 500. 21st Century Fox made an $80 billion takeover bid in recent weeks for Time Warner that was rebuffed, the New York Times reported, citing people briefed on the matter whom it didn’t identify. Fox indicated that it would sell CNN to ward off potential antitrust concerns since Fox News competes directly with CNN, the newspaper said.
Time Warner
Fox confirmed the proposal. The company is prepared to offer more than $85 a share for Time Warner, according to a person with knowledge of the matter. Fox shares fell 5.7 percent.
“This M&A just seems to have taken off, not that it was dead before, it just seems to be almost a daily event,” said Timothy Ghriskey, chief investment officer at New York-based Solaris Asset Management LLC, in a phone interview. “A bid for something like Time Warner, that’s big news. A takeover environment creates a lift to the markets. Everyone is looking for the next big name.”
Apple rose 0.7 percent and IBM gained 2 percent. The deal enables the iPhone maker to expand beyond individual customers and add more corporate clients through IBM’s sales force. IBM gets a boost in its effort to sell software and services to companies seeking to manage workers’ wireless devices.
GE, IGT
International Game Technology jumped 9.7 percent. Rome-based Gtech SpA agreed to buy the world’s biggest slot-machine maker for $4.7 billion.
General Electric Co. rallied 1.5 percent. The company is in talks with potential acquirers about selling its century-old household appliances business, said people familiar with the matter.
Bank of America Corp. dropped 1.9 percent. The second-biggest U.S. bank said profit declined 43 percent as it spent $4 billion to cover litigation costs, including a mortgage settlement with American International Group Inc.
Seven of 10 main industries in the S&P 500 advanced today. Energy companies increased 1.4 percent for the largest gain. Technology shares jumped 1.1 percent. Financial shares dropped 0.2 percent and health-care companies lost 0.5 percent.
The S&P Supercomposite Homebuilding Index rose 1.8 percent. Homebuilder confidence in July rose more than forecast to the highest level in six months as growing payrolls brightening the outlook. PulteGroup Inc. and D.R. Horton Inc. climbed more than 1.4 percent.
The Chicago Board Options Exchange Volatility Index fell 6.4 percent to 11.19. The gauge known as the VIX (VIX) jumped 17 percent last week for its biggest rally in three months, after closing July 3 at the lowest since 2007.
source: Bloomberg