“We get these little dust-ups whether it’s Cyprus or negative economic data, but then the market comes back to the thinking that the best game in town is U.S. equities and that’s what is driving stocks,” Dan Veru, chief investment officer at Palisade Capital Management LLC, said over the phone. The Fort Lee, New Jersey-based firm manages about $4 billion. “The U.S economy is growing, and relative to the rest of the world we’re far more stable.”
The bull market in equities entered its fifth year last month, with the S&P 500 more than doubling from its bottom in 2009, as corporate earnings topped estimates and the Federal Reserve carried out an unprecedented three rounds of bond purchases to spur the economy.
Companies begin releasing their first-quarter earnings next week, with Alcoa Inc. scheduled to announce results on April 8. Earnings among S&P 500 companies are forecast to decline 1.9% for the period, for the first retreat since 2009, according to estimates compiled by Bloomberg. In January, analysts forecast earnings growth of 1.2%. Profit expanded by 8% in the fourth quarter of 2012.
The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against claims, fell 5.2% to 12.88 today. The gauge, known as the VIX, is down 29% for the year.
Health-care stocks advanced 1.4% as a group and accounted for the four biggest gains among companies in the S&P 500. Humana, the second-largest private Medicare insurer, climbed 6.4% to $79.83 after the government announced a decision to do away with a planned rate reduction. Instead, insurers will receive a 3.3% increase in the rate that determines the payments they get for running the government’s Medicare Advantage plans.
UnitedHealth Group Inc. advanced 4.6% to $61.70 and Aetna Inc. gained 5.2% to $55.10 on the decision.
Hertz, the Park Ridge, New Jersey-based car rental company, climbed 8.1% to $23.69 after giving a 2015 earnings outlook above analyst estimates. The company predicts earnings between $3.10 and $3.30 a share for 2015, compared with the average analyst estimate of $2.39.
Urban Outfitters Inc. added 4% to $39.93. The retailer said comparative retail net sales have climbed at a high single-digit pace so far during the first quarter.
Nasdaq OMX plunged 11%, the most since August 2011, to $28.64. The company will buy eSpeed, an electronic trading system for U.S. Treasuries, from BGC Partners for about $750 million in cash. Moody’s Investors Service and Standard & Poor’s warned that Nasdaq’s debt rating may be lowered.
The deal gives the second-largest U.S. equity market a foothold in fixed income. Nasdaq will also issue about 15 million common shares over 15 years as part of the acquisition, pushing the potential value of the transaction to $1.23 billion, according to statements by the two companies. BGC Partners jumped 43% to $5.49.
Hewlett-Packard slipped 5.6% to $22. Goldman Sachs lowered its recommendation on the shares to sell from neutral. The brokerage said it remained cautious on the market for printers and servers.
The Bloomberg U.S. Airlines Index lost 4.4%, the biggest drop since November, as Delta Air Lines Inc. declined 6.9% to $15.13. The carrier’s March passenger revenue per available seat mile missed its estimate, the company said in a filing. Delta expects system capacity to be down by 2 to 3% in the latest quarter.