S&P 500 has best 3-day rally since January on economic reports

Banks Rally

Financial stocks jumped 1.2% as a group. JPMorgan climbed 1.4% to $53.23. Citigroup added 1.4% to $48.28. American Express Co. rose 1.8% to $75.20.

Time Warner Cable surged 4.7% to $108.52. Malone’s Liberty Media Corp., which owns 27% of Charter Communications, is working on how to structure an offer with enough cash to win over Time Warner Cable investors, according to people familiar with the discussions. Time Warner Cable isn’t interested in a deal and doesn’t think Liberty and Charter can come up with an offer that’s attractive, according to people familiar with management’s thinking.

ConAgra Foods Inc. added 5.6%, the most in the S&P 500, to $35.21. The maker of Chef Boyardee pasta and Pam cooking spray reported quarterly profit that topped analysts estimates as acquisitions drove sales in its consumer foods unit.

Paychex Tumbles

Paychex Inc. dropped 4.1% to $36.45. The payrolls manager reported fourth-quarter earnings per share of 34 cents, below the average analyst estimate for profit of 37 cents. Revenue in the period was $585.3 million, missing the $586.2 million average projection.

Herman Miller Inc. declined 1% to $26.95. The office-furnishings company said it expects first-quarter adjusted per-share earnings of 36 cents to 41 cents, compared with the average analyst estimate of 46 cents.

Investors should expect about $13 billion in selling of equities and buying of bonds as pension fund managers rebalance their portfolios at the end of the second quarter, Ramon Verastegui, a derivatives strategist at Societe Generale SA in New York, wrote in a June 25 note.

The S&P 500 has outperformed government bonds since the end of March with a total return of 2.7% through yesterday compared with a 5.1% loss for 10-year Treasuries, according to data compiled by Bloomberg and Bank of America Merrill Lynch.

Bond Funds

U.S.-listed bond mutual funds and exchange-traded funds saw record monthly redemptions of $61.7 billion through June 24, according to TrimTabs Investment Research, amid concern the Fed may scale back its unprecedented stimulus. Mutual funds that invest in U.S. stocks had $463 million in outflows in the five days that ended with the Fed’s policy statement on June 19, according to data from the Investment Company Institute released today. Redemptions since May 16 total $7.3 billion.

“The flows coming out of fixed income need to go somewhere,” Bill Schultz, chief investment officer who oversees about $1.1 billion at McQueen Ball & Associates in Bethlehem, Pennsylvania, said by phone. “Money market funds don’t offer anything, bonds are less attractive, so U.S. domestic equities on a relative scale look like the most attractive asset going forward.”

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