“We’re in the late stages of an accommodative Fed,” Andrew Slimmon, Chicago-based managing director of global investment solutions at Morgan Stanley Smith Barney, said by phone. His firm has $1.7 trillion in client assets. “They may change policy next year, so this stock market at some point is going to discount a change in policy. That’s going to temper the bull market in equities. I don’t think that’s going to happen soon. It’s likely going to be next year.”
The Chicago Board Options Exchange Volatility Index, or VIX, fell 4.1% to 12.59. The equity volatility gauge is down 2% for the week and its loss for the year is 30%.
Consumer discretionary stocks rallied, gaining 0.8%. Gap added 5.6% to $40.99. The largest U.S. apparel chain forecast first-quarter profit that topped analysts’ estimates. Earnings will be as much as 69 cents a share, exceeding the 56- cent profit projected by analysts on average.
Priceline.com Inc. increased 3.8% to $765.41, the highest since May 1999. The largest U.S. online-travel agent by market value reported first-quarter profit and sales that exceeded analysts’ estimates as travelers used the site to book hotel rooms.
Nvidia climbed 4.5% to $14.54 after the maker of graphics processors said net income rose to $77.9 million, or 13 cents a share, in the quarter ended April 28. Sales increased 3.2% to $954.7 million. Analysts on average had forecast earnings of 10 cents on sales of $940.7 million.
About 72% of S&P 500 companies that have reported quarterly results since the start of the earnings season have exceeded analysts’ profit estimates, while 52% missed sales projections, according to data compiled by Bloomberg.
Warner Chilcott Plc soared 20% to $18.01 after Actavis Inc. said it’s in early-stage talks to buy the drugmaker. Actavis, the largest U.S. maker of generic drugs by market value, jumped 12%, the most in the S&P 500, to $119.86.
The discussions come just a few weeks after Actavis weighed a merger with fellow generics maker Valeant Pharmaceuticals International Inc., said people familiar with the process, who asked not to be named because the negotiations are private.