S&P 500 snaps 3-day slump on better-than-forecast economic data

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.

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