U.S. stocks rose, sending the Standard & Poor’s 500 Index to its highest level in three weeks, amid optimism President Barack Obama will reach an agreement with Congress over a new budget.
Nine out of 10 groups in the S&P 500 rallied, with raw- material companies posting the biggest gain. Apple Inc. (AAPL) and Advanced Micro Devices Inc. led a rally in technology stocks. Walt Disney (DIS) Co., the world’s largest entertainment company, added 0.7 percent after raising its dividend. Kroger Co. (KR) rose 3.7 percent after boosting its profit projection for the year. Tiffany & Co. (TIF) tumbled 8.1 percent after cutting its forecast.
The S&P 500 increased 0.4 percent to 1,415.39 at 10:30 a.m. in New York. The Dow Jones Industrial Average rose 36.59 points, or 0.3 percent, to 13,021.70. Trading in S&P 500 companies was 2.9 percent below the 30-day average at this time of day, according to data compiled by Bloomberg.
“President Obama and John Boehner are very optimistic something will get done before year-end,” Jim Russell, the Cincinnati-based chief equity strategist at U.S. Bank Wealth Management, which oversees about $113 billion, said in a telephone interview. “We like the sound of that, but it’s also very apparent there’s only modest cooperation regarding the specifics of getting there. Equity markets will be very beholden to the incremental statements regarding the fiscal cliff, either progress or lack of progress.”
U.S. stocks climbed yesterday after comments by Obama and Speaker of the House Boehner fueled optimism an agreement can be reached to avert more than $600 billion in spending cuts and tax increases scheduled to begin on Jan. 1. The gains have trimmed the S&P 500’s decline since the president won re-election on Nov. 6 to 1 percent.
Obama reached out to chief executives and middle-income taxpayers, imploring them to press Congress to avoid the fiscal cliff as he said he wants to get a deal “done before Christmas.” Treasury Secretary Timothy F. Geithner arrives at the Capitol today to face demands from Republican leaders to spell out spending cuts. He will meet separately with each of the top four leaders in Congress.
Stocks extended gains after a report showed Americans signed more contracts in October to purchase previously owned homes, another sign the recovery in the housing market is being sustained. The index of pending home resales climbed 5.2 percent, exceeding the highest estimate in a Bloomberg survey of economists, to 104.8, figures from the National Association of Realtors showed today in Washington. The median forecast in the Bloomberg survey called for a 1 percent gain.
Gross domestic product grew at a 2.7 percent annual rate, up from a 2 percent prior estimate, revised figures from the Commerce Department showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 2.8 percent gain. Household purchases climbed at a 1.4 percent rate, the least in more than a year and down from a previously reported 2 percent rate, and income gains were also cut.
Fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed. Applications for jobless benefits decreased to 393,000 in the week ended Nov. 24, Labor Department figures showed today. Economists forecast 390,000 claims, according to the median estimate in a Bloomberg survey.
Commodity producers posted among the biggest gains out of 10 groups in the S&P 500, rising more than 0.6 percent. The S&P GSCI Index, which tracks 24 commodities, halted three straight days of losses, climbing 1.3 percent.
Technology companies also advanced today, increasing 0.5 percent. Apple, the world’s most valuable company, rallied 1.1 percent to $589.40. Advanced Micro Devices Inc. (AMD) surged 6.6 percent to $2.09. The second-largest maker of personal-computer processors, which has fallen 61 percent this year, jumped 4.3 percent yesterday after Reuters reported it is selling its Austin, Texas campus.
Walt Disney gained 0.7 percent to $49.53 after raising its annual dividend by 25 percent, joining other companies boosting their payouts ahead of an expected tax-rate increase next year. The payment of 75 cents per share will be made on Dec. 28 to shareholders as of Dec. 10. The previous 60-cent annual dividend was paid to investors in January.
Kroger rose 3.7 percent to $25.98. The supermarket operator boosted its profit projection for the fiscal year to at least $2.44 a share. That’s up from the previous guidance of no more than $2.42 and higher than the average analyst estimate.
Research In Motion Ltd. (RIM) added 6.1 percent to $11.78 as Goldman Sachs Group Inc. Goldman upgraded the BlackBerry maker to buy from neutral, saying the new BlackBerry 10 phones could help it return to profitability in fiscal 2014.
Guess? Inc. (GES) climbed 2.9 percent to $25.99 after declaring a special dividend of $1.20 per share payable Dec. 28. The Los Angeles-based apparel maker also said it sees fourth-quarter earnings per share of 85 cents to 95 cents, compared with the average 94 cent analyst estimate.
Tiffany tumbled 8.1 percent to $58.54. The world’s second- largest jewelry retailer cut its annual profit forecast for the third time this year after higher diamond costs ate into margins and customers curbed spending in weak economies. The New York- based company’s gross margin, a key measure of profitability, shrank more than analysts anticipated last quarter as precious- metals costs also increased.
Kohl’s Corp. (KSS) plunged 9.3 percent to $46.41. The department- store chain operator said same-store sales in November will be down 5.6 percent, missing the average analyst estimate, which called for an increase of 2.1 percent.
Aeropostale Inc. (ARO) dropped 6.5 percent to $13.20 after the teen-apparel retailer projected fourth-quarter earnings per share of 36 cents to 41 cents, compared with the average analyst estimate that called for 55 cents. Chief Executive Officer Thomas Johnson said Black Friday weekend sales were “encouraging,” while he remains “cautious” for the rest of the quarter.
A Bloomberg Global Poll published today showed that three out of four global investors expect Obama and congressional leaders to reach a short-term agreement. Only 6 percent of investors anticipate a political impasse that would send the U.S. economy over the fiscal cliff and into a recession, according to the poll conducted on Nov. 27.
The world economy is in its best shape in 18 months as China’s prospects improve and the U.S. looks likely to avoid the fiscal cliff, according to the poll.
Two-thirds of the 862 surveyed described the global economy either as stable or as improving. That’s up from just over half who said that in September and is the most since May 2011.
The U.S. came out on top for the eighth straight quarter when investors were asked which markets will offer the best opportunities over the next year.
“The market’s optimistic that we’re going to come to some conclusion on the fiscal cliff, and that spending in corporate America might get unlocked with the return of business confidence,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said by phone. “In the next couple weeks, there’s going to be increasingly divisive negotiations that might the shake the market’s confidence a bit. It might cause it to pull back and we might see a lot of volatility.”