U.S. stocks gained, ending a three- day decline in the Standard & Poor’s 500 Index, amid better- than-forecast economic data and acquisitions in the media and grocery industries.
Gannett Co., the publisher of USA Today, jumped 31% after agreeing to buy Belo Corp. for about $1.5 billion. Belo surged 27%. Safeway Inc. soared 8.5% as the second-largest U.S. grocery chain agreed to sell its Canadian stores. DuPont Co. slid 0.4% after cutting its forecast.
The S&P 500 rose 1.2% to 1,632.04 at 3:09 p.m. in New York, after dropping as much as 0.3% earlier. The Dow Jones Industrial Average added 153.82 points, or 1%, to 15,149.05. Trading in S&P 500 stocks was 9% below the 30- day average during this time of day.
“It’s undeniable that the series of data are getting better,” Chris Bertelsen, chief investment officer at Global Financial Private Capital, a Sarasota-based private wealth firm with about $2 billion in assets under management, said in a phone interview. “The only issue for the market is we’re in a vacuum month. In other words, there are no earnings, there is nothing to latch onto other than an occasional number here and there and people are worried about the Fed tapering.”
Retail sales in the U.S. rose 0.6% last month, the biggest increase in three months, Commerce Department figures showed today. The median forecast of 83 economists surveyed by Bloomberg called for a 0.4% advance. Data from a separate report indicated fewer Americans than forecast filed applications for unemployment benefits last week.
Investors have been scrutinizing economic data to determine whether growth is strong enough to prompt the Federal Reserve to scale back stimulus measures. The S&P 500 has slipped 2.4% since May 21 as Fed Chairman Ben S. Bernanke said the central bank may scale back bond buying if the U.S. labor market “improves in a real and sustainable way.” Three years of earnings growth and stimulus from the Fed has helped push the gauge up 141% from its bear-market low in 2009.
Equities fell earlier as the World Bank said in a report the global economy will expand 2.2% this year, less than a January forecast for 2.4% growth and slower than last year’s 2.3%. It lowered its projection for developing economies and said the euro area’s gross domestic product will fall 0.6%.
Stocks in Asia plunged, erasing the MSCI Asia Pacific Index’s 2013 advance and dragging Japan’s Nikkei 225 Stock Average into a bear market. The Hang Seng China Enterprises Index of Hong Kong-listed mainland firms slid 2.7%, and the Nikkei 225 tumbled 6.4%.
“The economy around the globe is slowing down so U.S. investors are certainly watching the data and hopefully see signs that the U.S. is not joining their friends in Europe and emerging markets,” Wayne Wilbanks, chief investment officer at Wilbanks, Smith & Thomas Asset Management LLC in Norfolk, Virginia, which oversees $2.5 billion, said by phone. “As markets get higher and higher, they can’t decide, ‘is the game over?’ Everybody wants to take their profits in this market, but they don’t want to miss the last 100 points.”
The Chicago Board Options Exchange Volatility Index, or VIX, slipped 10% today to 16.74. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80% of the time, reached a six-year low in March and has since surged 48%.
All 10 industries in the S&P 500 gained. Consumer- discretionary and raw-materials companies climbed the most, rising at least 1.4%.
Gannett rallied 31% to $26 and Belo soared 27% to $13.66. Both stocks hit five-year highs. Gannett will pay $13.75 per Belo share in cash, plus the assumption of $715 million in debt, according to a statement. The acquisition will make Gannett the fourth largest owner of major network affiliates, the company said. It will almost double Gannett’s broadcast portfolio to 43 stations from 23.
Safeway jumped 8.5% to $25.07 after agreeing to sell its Canadian stores to Empire Co.’s Sobeys Inc. unit for about C$5.8 billion ($5.7 billion) in cash. Proceeds from the sale will be used to pay down $2 billion in debt and buy back stock, Safeway said.
PVH Corp. climbed 9.5% to $121.80. The owner of the Tommy Hilfiger and Calvin Klein brands said that excluding some items it earned $1.91 a share in the first quarter. That beat the average analyst estimate of $1.37 in a Bloomberg survey.
DuPont slipped 0.4% to $54.03. The largest U.S. chemical company by market value cut its first-half earnings forecast after cool, wet weather in North America and Europe affected revenue and costs at its agriculture and nutrition and health units.
Williams Cos. fell 1.6% to $33.48. At least two people died after an explosion and fire at a Williams chemical plant in Geismar, Louisiana, and a third person is missing and presumed dead, according to Jean Kelly, a spokeswoman with the Louisiana Department of Environmental Quality. The cause of today’s explosion isn’t known, she said.
Coty Inc. declined 1.1% to $17.31 on the first day of trading. The maker of perfumes endorsed by Beyonce and Heidi Klum raised about $1 billion on behalf of existing holders in an initial public offering yesterday.