U.S. stocks rose, erasing earlier losses, as Monsanto Co. (NYSE:MON) announced a $10 billion stock buyback plan and investors speculated that the economy is recovering from a first-quarter contraction.
Monsanto, the largest seed company, rallied 5.5 percent for the biggest advance in the Standard & Poor’s 500 Index. Raw- material producers and health-care shares led gains in the U.S. equity benchmark.
The S&P 500 added 0.1 percent to 1,952.73 at 9:56 a.m. in New York. The Dow Jones Industrial Average climbed 31.24 points, or 0.2 percent, to 16,849.37.
The U.S. economy shrank 2.9 percent in the first quarter, the worst reading since 2009, as consumer spending cooled. Ukrainian President Petro Poroshenko called for immediate talks with Russia, Germany and France after pro-Russian rebels shot down a government helicopter. Sunni militants are consolidating their hold on a swath of Iraq and now threaten the integrity of the state, U.S. military and intelligence officials said.
The decline in gross domestic product followed a previously reported 1 percent drop, marking the biggest downward revision from the agency’s second GDP estimate since records began in 1976. The revision reflected a slowdown in health-care spending.
Consumers returned to stores and car dealerships, companies placed more orders for equipment and manufacturing picked up as temperatures warmed, indicating the early-year setback was temporary. Combined with more job gains, such data underscore the view of Federal Reserve policy makers that the economy is improving and in less need of monetary stimulus.
Orders for U.S. business equipment climbed in May, showing corporate investment is helping revive the economy after a slump at the start of the year.
Bookings for non-military capital goods excluding aircraft rose 0.7 percent after a 1.1 percent drop in April, data from the Commerce Department showed today in Washington. Demand for all durable goods -- items meant to last at least three years -- decreased 1 percent, reflecting declines in the volatile transportation and defense categories.
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