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

GE Rallies

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.

Bloomberg News

<< Page 2 of 2

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome