May 16 (Bloomberg) -- U.S. stocks advanced, snapping a three-day decline in the Standard & Poor’s 500 Index, as better- than-estimated reports on housing starts and industrial production bolstered confidence in the world’s largest economy.
JPMorgan Chase & Co. and Goldman Sachs Group Inc. increased at least 1 percent to pace gains in financial companies. General Motors Co. climbed 3.8 percent as Berkshire Hathaway Inc. disclosed a stake. General Electric Co. rose 3.3 percent as its finance unit plans to pay a special dividend of $4.5 billion to the parent company. Target Corp., the second-largest U.S. discount retailer, added 1.5 percent as profit topped estimates.
The S&P 500 rose 0.2 percent to 1,333.31 at 11:06 a.m. New York time. The benchmark measure for U.S. equities pared a gain of 0.8 percent. The Dow Jones Industrial Average gained 25.24 points, or 0.2 percent, to 12,657.24.
“We’ve had some good economic data supporting the U.S. growth story,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said in a telephone interview. His firm manages about $112 billion. “It looks like we’re seeing stabilization in housing. Industrial production was a nice surprise. It’s just then fighting with headlines and rumors coming out of Europe.”
Equities gained as data showed output at factories, mines and utilities increased 1.1 percent last month, the most since December 2010, after a 0.6 percent decline in March that was revised from no change. Economists forecast a 0.6 percent gain. Earlier today, a report signaled that the residential real estate industry is stabilizing.
Europe’s Crisis
The benchmark gauge for American equities had dropped 2 percent over the previous three days amid concern Greece will leave the euro. European Central Bank President Mario Draghi indicated that while his “strong preference” is that Greece stays in the euro area, the bank won’t compromise on its principles to prevent an exit.
“The U.S. economic data is consistent with the bottom not falling out of the equity market,” Barry Knapp, the New York- based head of U.S. equity strategy at Barclays Plc, said in a telephone interview. “Yet the situation in Europe is extremely precarious. Everybody wants Greece to stay in the euro, but does Greece want to stay? More needs to be done. You can’t have a lot of confidence that assets will stabilize.”
Eight of 10 groups in the S&P 500 rose today as commodity, industrial and financial shares advanced. A measure of homebuilders in S&P indexes climbed 1.1 percent. JPMorgan increased 1 percent to $36.61. Goldman Sachs added 1.3 percent to $101.12.
Boosting Stakes
Hedge funds Moore Capital Management LLC and Blue Ridge Capital LLC boosted their stakes in JPMorgan, while Kingdon Capital Management LLC divested, before the shares plunged because of a $2 billion trading loss.
Moore, the New York-based firm run by Louis Moore Bacon, bought 6 million shares of JPMorgan and its $297.3 million stake was its largest U.S. stock holding as of March 31. John Griffin’s New York-based Blue Ridge purchased 1.85 million shares, raising its stake in the bank to 6.14 million.
JPMorgan slumped 21 percent from the end of the first quarter through yesterday, including an 11 percent decline following the company’s disclosure of losses tied to synthetic credit derivatives. Chief Executive Officer Jamie Dimon said the New York-based bank made “egregious mistakes.”
GM rallied 3.8 percent to $22.24. Warren Buffett’s firm had 10 million shares of the automaker on March 31, Omaha, Nebraska- based Berkshire said yesterday in a filing disclosing U.S. stockholdings.
GE gained 3.3 percent to $19.02. Payments to the parent company will begin with a $475 million quarterly dividend for the three months through June, according to a statement today. For the year, the dividend is targeted to be 30 percent of GE Capital’s earnings, excluding the special payment.
Target rose 1.5 percent to $55.91. The retailer increased same-store sales 5.3 percent in the quarter, its best performance in six years, as the warmest temperatures in North America in 50 years encouraged shopping.
Cisco Systems Inc., the biggest maker of computer- networking equipment, jumped 1.7 percent to $16.83. Barclays Plc raised its recommendation to the equivalent of buy.
J.C. Penney Co. slumped 15 percent, the most in the S&P 500, to $28.35. The department-store chain led by Apple Inc.’s former retailing chief reported a first-quarter loss and sales that fell more than analysts projected.
Missing Estimates
Abercrombie & Fitch Co. fell 12 percent to $39.96. The operator of namesake and Hollister stores reported first-quarter revenue that missed analysts’ estimates and said same-store sales will decline this fiscal year amid weakness in Europe.
Arena Pharmaceuticals Inc. sank 5.8 percent to $5.71. The San Diego-based drugmaker said it will sell shares in a public offering, its first since July 2009. It didn’t specifying the size of the deal.
Facebook Inc. investors including Accel Partners and Goldman Sachs Group Inc. raised the number of shares they’re selling in the social network’s initial public offering, boosting the sale to as much as $16 billion.
Existing holders will offer 241.2 million shares, bringing the total on offer to 421.2 million, a regulatory filing today shows. Accel, the biggest seller in the IPO, boosted its amount 28 percent to 49 million, and Digital Sky Technologies increased its amount 74 percent to 45.7 million.
“Everybody is cashing out,” said Trung-Tin Nguyen, a hedge-fund manager at TTN AG in Zurich. “It’s normal for private equities and venture capitals to cash out, but the obvious question is whether they are stretching it too far.”
Largest Ever
Facebook, gearing up for the largest-ever IPO of a technology company, had already increased the offering’s price range to $34 to $38 apiece, from $28 to $35 previously. At $16 billion, Facebook’s debut would surpass that of General Motors Co. to be the second-largest in U.S. history, excluding so- called over-allotments, which let underwriters buy more shares at a later date, data compiled by Bloomberg show.
Investors will be able to avoid losses in the broader equity market this year by buying stocks with larger-than- average dividends, said David Kostin, chief U.S. equity strategist at Goldman Sachs Group Inc.
“The scarcest commodity in the world is yield,” the New York-based strategist said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “You have negligible returns” in most asset classes. “Where are you getting any income? You are going to get it in the form of dividends.”
Kostin has a year-end projection for the equities gauge of 1,250, according to a weekly survey by Bloomberg News. The S&P 500 has a dividend yield of 2.1 percent, according to Bloomberg data. Ten-year Treasuries yield 1.8 percent.
