U.S. stocks advanced, indicating the Standard & Poor’s 500 Index will trim its first quarterly decline since September, after European leaders reached an agreement that alleviated concern banks will fail.
The S&P 500 rose 1.3 percent to 1,345.79 at 9:31 a.m. New York time.
“We are getting a pretty nice relief rally,” said Christopher Orndorff, who helps oversee $450 billion as senior portfolio manager at Western Asset Management Company in Pasadena, California, in a telephone interview today. The European agreement “appears to be a step in the right direction in terms of solving the problem from a longer term perspective.”
Global stocks rallied as euro-area leaders agreed to relax conditions on emergency loans for Spanish banks and possible help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the debt crisis. In the U.S., data showed that consumer spending stalled in May. Consumer sentiment slid in June to a six-month low, economists predicted.
More than $1 trillion was erased from U.S. equity values this quarter amid concern about a worsening of Europe’s debt crisis and a global slowdown. The S&P 500 tumbled 5.6 percent through yesterday led by technology and financial shares. The benchmark measure has risen 1.4 percent so far this month amid expectations global policy makers would act to spur growth.
Initial public offerings fell 34 percent this quarter as Facebook Inc.’s disappointing debut and worsening economic conditions rattled investors, pressuring companies to lure buyers with cheaper valuations.
IPOs globally raised $41.3 billion, the worst second quarter since 2009, data compiled by Bloomberg show. That compared with $62.7 billion a year ago. At least 50 companies shelved sales as Europe’s debt crisis spread, growth prospects slowed in China and Facebook’s stock sank 17 percent from its May 17 IPO price.
“With the economy and with Europe, there are more questions than answers in investors’ minds, and they want some clarity before they put their money down,” said Matt McCormick, who helps oversee $6.2 billion at Cincinnati-based Bahl & Gaynor Inc. “After what happened with Facebook, people want IPOs to go off without a hitch.”
Coty Inc., the perfume maker that pulled a takeover offer for Avon Products Inc., filed for an initial public offering seeking as much as $700 million.
All the shares in the IPO will be offered by existing shareholders, the company said in a filing today. Coty, based in New York, withdrew its sweetened $10.7 billion offer for Avon on May 15, citing the cosmetics seller’s refusal to negotiate. The company hired Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley to help manage its share sale, it said.
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