U.S. stocks rise as commodity shares rally before GDP, jobs data

GDP Report

Gross domestic product grew at a 2% annualized rate after a 2.5% pace from April through June, according to the median forecast of 69 economists surveyed by Bloomberg before Commerce Department figures due Thursday. Growth in consumer spending, the biggest part of the economy, was probably the weakest since 2011. Payrolls rose by 125,000 workers last month after a 148,000 gain in September, Labor Department figures may show Friday.

Data today showed U.S. factory orders increased 1.7% in September after falling 0.1% the prior month. Economists estimated a gain of 1.8% for September.

“We’ve been in this slow growth environment for some time and we don’t see it breaking out of the trend,” Rex Macey, who helps oversee $20 billion as chief investment officer at Wilmington Trust Investment Advisors in Atlanta, said in a phone interview. “That’s the thing markets kind of like, where it could be a little warmer, but at least it’s not too hot.”

Year-End Momentum

The rally in U.S. equities may accelerate in the final two months of the year and lift the S&P 500 to its biggest annual increase in 16 years, a look at historical data suggests. Since 1928, shares have climbed in November and December 82% of the time when the benchmark gauge advanced at least 10% through October, data compiled by S&P and Bloomberg show. The mean increase of 6% in this period signals that the index could jump to 1,862.79.

In another sign that investor appetite for equities is growing, Twitter Inc. raised the price of shares in its initial public offering by as much 25%, putting it on track to raise $1.75 billion amid brisk demand.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, lost 1.7% today to 13.05. The measure is down 28% this year.

Eight out of 10 S&P 500 main industries advanced as energy companies climbed 1.1% for the best performance. Exxon Mobil increased 2.4% to $91.93 for the biggest gain in the Dow.

Steel, Coal

U.S. Steel climbed 4.2% to $26.86 and AK Steel Holding Corp. rallied 9.1% to $5.02. Both stocks were raised to buy from sell at Goldman Sachs.

U.S. steel demand is “heading to a solid sustainable recovery” over coming years, Sal Tharani, an analyst with Goldman Sachs, wrote in a note, boosting the rating on the U.S. steel industry to neutral from cautious.

Alcoa Inc. jumped 6.6%, the most in the S&P 500, to $9.88.

Coal stocks advanced amid an improved outlook for the steel industry. Alpha Natural Resources Inc., a producer of metallurgical coal that’s used to make steel, jumped 10% to $8.17. Consol Energy Inc. advanced 3.4% to $37.87.

Vulcan Materials Co. rallied 5.7% to $56.71. The producer of construction aggregates reported third-quarter sales of $813.6 million, beating the average analyst estimate by the biggest margin in more than a year, data compiled by Bloomberg show.

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