U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, as China’s cash crunch eased and slower-than-forecast economic growth fueled speculation the Federal Reserve will maintain stimulus.
Citigroup Inc. and Bank of America Corp. climbed at least 1% as financial stocks rallied. Boeing Co. and UnitedHealth Group Inc. jumped more than 1.4% to pace gains in the the Dow Jones Industrial Average. Barrick Gold Corp. and Newmont Mining Corp. fell more than 5.9%, leading a selloff in precious-metal producers as gold and silver slumped to 34-month lows.
The S&P 500 increased 1% to 1,604.33 at 2:42 p.m. in New York. The index has rallied 2% over two days, after slumping to a nine-week low on June 24. The Dow climbed 156.08 points, or 1.1%, to 14,916.39 today. Trading of S&P 500 companies was 5% below the 30-day average at this time of day.
“We’ve had a relatively sharp selloff over a couple of days and we’re getting a bounce here,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.6 billion in assets, said in a phone interview. “Weaker economic numbers may be met with favor by the market because it can suggest that the Fed can slow the tapering process or not taper if the economy looks weaker than expected.”
Gross domestic product expanded at a revised 1.8% annualized rate from January through March, down from a prior estimate of 2.4%, figures from the Commerce Department showed today in Washington. Household purchases, which account for about 70% of the economy, were revised to a 2.6% advance compared with the 3.4% gain estimated last month.
The S&P 500 climbed 1% yesterday after reports on durable-goods orders, new house sales and consumer confidence bolstered confidence in the economy. The gauge has still retreated 3.9% from a record high reached May 21 as Federal Reserve Chairman Ben S. Bernanke said the central bank may start paring quantitative-easing measures this year if the recovery continues to improve in line with forecasts.
Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging as much as 147% from its March 2009 low.
Stocks advanced in Asia and Europe today as the cost of locking in China’s interest rates slid for a fourth day and money-market rates fell. The People’s Bank of China said in a statement yesterday that it has provided financing to some financial institutions to stabilize interbank lending rates. The central bank added that it will use short-term liquidity operations and existing loan-facility tools to ensure steady markets.
“The PBOC reiterated overnight that it is comfortable with its current stance on liquidity and stands ready to avoid a collapse, but it is not keen to give in to demand from banks,” said Ioan Smith, a strategist at Knight Capital Europe Ltd. in London. “This may have helped markets to some degree, but there will be a lot of posturing over the next few days as investors have the month end in their sights.”
The S&P 500 has lost 1.7% in June, paring its advance in the second quarter to 2.2%. It is on course to end a streak of seven monthly advances, the longest run since September 2009. The Chicago Board Options Exchange Volatility Index, or VIX, retreated 6.3% to 17.30. The benchmark gauge for U.S. stock options surged to the highest level since Dec. 28 last week amid concern the Federal Reserve may begin tightening monetary policy.
All 10 industries in the S&P 500 increased, with health- care companies climbing the most. UnitedHealth jumped 1.8% to $64.86. Johnson & Johnson rallied 1.9% to $86.98 and Boeing added 1.9% to $100.50.
Financial shares advanced 1.1%. Citigroup gained 1.4% to $47.67, and Bank of America added 1% to $12.80.
Pandora Media Inc. gained 7.1% to $17.57. Cowen & Co. analyst John Blackledge boosted his rating of the biggest online radio service to outperform, the equivalent of buy, from market perform, following news that the number of U.S. listeners in cars topped 2.5 million.
Hartford Financial Services Group Inc. added 2.3% to $29.85. The insurer boosted its plan for buybacks and lifted its dividend by 50% after Chief Executive Officer Liam McGee sold assets to simplify the company.
Teradata Corp. surged 3.8% to $50.36. Morgan Stanley said shares of the database management company represent a buying opportunity after a recent slump, citing improving demand for data warehouses. The stock has fallen 19% this year, compared to a 12% increase in the S&P 500.
Barrick Gold, the world’s largest gold miner, dropped 7.4% to $14.92, the lowest in a decade. Newmont slid 5.9% to $27.22. Materials producers had the weakest performance among 10 S&P 500 groups as gold and silver tumbled after yesterday’s U.S. economic data bolstered the case for the Fed to reduce stimulus.
Apollo Group Inc. sank 8.6% to $17.71 for the biggest drop in the S&P 500. The largest U.S. for-profit college said earnings in the fiscal third quarter fell 40% as new enrollment tumbled.
Apple Inc. slid 1.3% to $397.38, it’s lowest level since April 24. The maker of iPhones and iPads has fallen 14% from a May 8 peak, and is down 43% from a record high reached in September.