U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, amid better-than-estimated data on housing and durable-goods orders.
A measure of homebuilders in S&P indexes surged 4 percent to the highest level since 2008 as data showed more Americans than forecast signed contracts to purchase previously owned homes in May. Monsanto Co., the world’s largest seed company, gained 2.6 percent as earnings beat estimates. Bristol-Myers Squibb Co. added 1.7 percent after the drugmaker doubled the size of its share buyback program. Facebook Inc. declined 2.2 percent after at least 17 firms started to cover the shares.
The S&P 500 added 0.7 percent to 1,329.77 at 10:51 a.m. New York time, extending its monthly gain to 1.5 percent. The benchmark gauge has fallen 5.6 percent so far this quarter. The Dow Jones Industrial Average gained 81.44 points, or 0.7 percent, to 12,616.11 today. Trading in S&P 500 companies was down 12 percent from the 30-day average at this time of day.
“The economic data was encouraging,” said Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital in Greenwood, South Carolina. “It’s important to see that because most recently we’ve had weaker data here and in China while Europe came back to the forefront. Any policy moves out of China would certainly be welcomed. In addition, it’s the end of the quarter and you tend to see some buying around that time.”
Equities rallied amid signs the real estate industry is firming three years after the start of the economic recovery. Orders for durable goods climbed more than forecast in May, easing concern that U.S. manufacturing is faltering.
Stocks rose in Europe and Asia for the first time in five days amid speculation China will add to economic stimulus and Italian bonds gained after a debt sale ahead of a June 28-29 European Union summit. German Chancellor Angela Merkel shut the door to joint euro-area bonds as a means of lowering Spain’s borrowing costs, saying they are the “wrong way” to achieve the greater European integration needed to stem the debt crisis.
The benchmark measure for U.S. equities is on pace for the first quarterly decline since September amid concern about a global economic slowdown. Energy, financial and technology shares have had the biggest losses so far in the second quarter, tumbling at least 8.8 percent.
Monsanto added 2.6 percent to $79.90. Sales of corn seed and genetic licenses rose 35 percent as U.S. farmers planted the biggest crop in 75 years. Soybean sales gained 15 percent, driven by demand for the newest seed engineered to tolerate Monsanto’s Roundup herbicide. Chairman and Chief Executive Officer Hugh Grant also is expanding in Latin America and Eastern Europe.
Bristol-Myers gained 1.7 percent to $35.09 after it authorized $3 billion in additional repurchases to be made over the “next couple years.” The new phase of the buyback program, announced in a statement today by the New York-based drugmaker, gives the company the ability to repurchase $3.34 billion of an estimated $58.3 billion in stock.
Lennar Corp. jumped 5.2 percent to $28.82. The third- largest U.S. homebuilder by revenue climbed after a tax benefit and improving demand fueled a surge in its fiscal second-quarter profit.
Facebook slid 2.2 percent to $32.38. The firms starting coverage on the company include its lead underwriter, Morgan Stanley. The New York-based bank started Facebook with the equivalent of a buy rating, as did seven other firms including JPMorgan Chase & Co. and Goldman Sachs Group Inc. There were eight holds and one sell, data compiled by Bloomberg show.
The analysts’ underwriting banks have come under criticism after the IPO was set at a price that valued Facebook at 107 times reported earnings in the past 12 months, more than every Standard & Poor’s 500 Index stock except two. Facebook fell below its initial public offering price of $38 on the second day of trading on May 21 and hasn’t returned since.
O’Reilly Automotive Inc. tumbled 17 percent to $79.88. The retailer of auto parts, tools and accessories sank the most in more than a decade after saying sales growth was slower than expected and second-quarter profit will be on the lower end of the company’s forecast range.
Economic reports are due to take a turn for the better that will lift U.S. stocks, according to Binky Chadha, chief global strategist at Deutsche Bank AG.
Investors are suffering from “data disappointment” that has become extreme by historical standards, Chadha wrote in a report two days ago. “The typical pattern from here would be for fewer negative surprises and then positive ones.”
Changes in jobless claims explain 88 percent of the S&P 500’s performance during the period, according to statistical analysis cited in the report. The figure is near a 100 percent limit when two values move in lockstep.
As the relationship suggests, economic data “have been the key driver of equities,” Chadha wrote. They largely explain why stocks have retreated in the past few weeks, the New York-based strategist added. The S&P 500 has fallen as much as 9.9 percent from this year’s high, set on April 2.
Europe’s sovereign-debt crisis and slowing growth in emerging markets have contributed to the decline, the report said. Any stock-market rebound triggered by policy changes on these issues won’t last unless the economic data turn around, he wrote.