U.S. stocks rose, extending the Dow Jones Industrial Average’s record high, as a private jobs report showed companies took on more workers than estimated and the Federal Reserve said the economy is growing.
Bank of America Corp. jumped 3% to pace gains among financial shares. VeriFone Systems Inc. rose 9.1% as the maker of credit-card terminals reported earnings that beat its forecasts. Sohu.com Inc., owner of China’s second-largest online video website, slid 9.7% after saying it’s not in talks to take the company private or delist its stock. Staples Inc. fell 6.7% after forecasting profit that was less than analysts estimated.
The Standard & Poor’s 500 Index increased 0.3% to 1,544.59 at 2:50 p.m. in New York. The Dow rose 63.65 points, or 0.5%, to 14,317.42. Trading in S&P 500 companies was in- line with the 30-day average at this time of day.
“The market’s responding to some degree to fundamentals,” Stephen Wood, who helps manage about $163 billion as New York- based chief market strategist for North America at Russell Investments, said by telephone. “The economy is growing, albeit at a frustrating pace,” he said. “We’re seeing housing begin to contribute rather significantly to the economy.”
The Dow advanced to a record yesterday for the first time since 2007, erasing losses from the financial crisis as the bull market enters its fifth year. The S&P 500 is about 1.5% below its record high. The benchmark index has surged 128% from a 12-year low in 2009 as companies reported better- than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
Companies added 198,000 workers in February, according to a private report based on payrolls. The increase in employment followed a revised 215,000 gain the prior month, figures from the ADP Research Institute showed today. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 170,000.
A Labor Department report this week may show private payrolls rose by 170,000 last month, according to the Bloomberg survey median. Orders to U.S. factories fell in January, weighed down by a slump in demand for military hardware and commercial aircraft, the Commerce Department reported.
Fed Chairman Ben S. Bernanke described the job market as “generally weak” in testimony to a Senate committee on Feb. 26. The U.S. economy expanded at a modest to moderate pace across most of the country amid rising consumer demand for homes and autos, the Fed said in its Beige Book report, a summary and analysis of economic conditions in 12 U.S. districts.
“The big driver clearly is Fed policy,” Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said by telephone. “There’s likely to be a growth-related correction at the end of the first quarter or the beginning of the second. We don’t have to worry too much about the Fed withdrawing stimulus early. Our problem is the impact of fiscal contraction, sluggish growth and investors being overly enthusiastic about the implications of the housing market.”
Raw-material, financial and health-care companies had the largest gains among 10 groups in the S&P 500, while telephone and utility stocks fell the most. Bank of America rallied 3% to $11.90. Alcoa Inc., the largest U.S. aluminum producer, added 2.6% to $8.57.
VeriFone gained 9.1% to $21. First-quarter profit was 51 cents a share on an adjusted basis, more than the company’s Feb. 20 projection of 47 cents to 50 cents. The stock has plunged 29% this year.
Best Buy Co. increased 3.2% to $18.99. Jefferies Group Inc. raised its recommendation on the retailer to buy from hold, with analysts led by Daniel Binder saying management will cut costs and bring new processes, discipline and measurement to the business.
First Solar Inc. helped lead gains in the S&P 500, jumping 4.8% to $26.30. The biggest maker of thin-film solar panels was raised to market perform from underperform by Raymond James.
TripAdvisor Inc. rallied 2.4% to $48.81. Deutsche Bank AG analyst Lloyd Walmsley raised his price estimate for the online travel-recommendation service to $52 a share from $50, saying he was more confident that revenue growth will accelerate this year and next after a presentation by the chief financial officer at a Deutsche Bank conference.
MGIC Investment Corp. climbed 5.2% to $5.62. The third-largest U.S. private mortgage insurer began selling 135 million common shares and $350 million in convertible senior notes due in 2020, saying it may use the funds to bolster its unprofitable unit that backs home loans.
Sohu dropped 9.7% to $44.12 after releasing a statement today responding to “rumors circulating in the market.” The shares rallied 12% yesterday as Hong Kong’s South China Morning Post reported that Beijing-based Sohu is talking to investment banks and private equity funds about taking the company private, citing four unidentified people in the financial industry.
Staples tumbled 6.7% to $12.40 after forecasting profit for the current fiscal year that was less than analysts estimated amid what the chief executive officer called “a challenging sales environment.”
CEO Ron Sargent said Staples, the largest U.S. office- supply retailer, worked to manage its expenses in the fourth quarter when same-store sales in North America fell 5%. Retailers including Staples have faced more competition from the likes of Amazon.com Inc. as Americans increasingly shun big-box stores for the convenience of the Web.
BlackBerry, formerly known as Research In Motion Ltd., jumped 5.9% to $13.32. Chief Executive Officer Thorsten Heins told a Spanish newspaper that the company’s new Z10 model has drawn more interest than expected from users of rival smartphones.
EBay Inc. tumbled 2.4% to $53.96. The operator of the world’s largest online marketplace retreated after Colin Sebastian, an analyst at Robert W. Baird, said growth slowed in February as consumers curbed spending.