Federal Reserve Chairman, Ben Bernanke
The Standard & Poor’s 500 Index (SPX) rose, rebounding from the lowest level in two months, as Greece attempted to form a new government and a decline in American jobless claims helped allay concern of a labor market setback.
Citigroup Inc. (C) and Wells Fargo & Co. (WFC) advanced at least 1.5 percent to pace gains in financial shares. News Corp., the media company run by Rupert Murdoch, and Monster Beverage Corp. (MNST), an energy-drink maker, rallied more than 5.7 percent after earnings beat analysts’ estimates. Cisco Systems Inc. (CSCO) sank 10 percent after its sales and profit forecasts disappointed investors, according to Bloomberg report.
The S&P 500 rose 0.4 percent to 1,360.18 at 3 p.m. New York time. The Dow Jones Industrial Average added 39.51 points, or 0.3 percent, to 12,874.57. It snapped a six-day drop, the longest decline since August. Trading in S&P 500 companies was 10 percent above the 30-day average at this time of day.
“They are still talking in Greece and that brings some relief,” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, said in a telephone interview. “The crash off the cliff in terms of an extreme political alliance over there didn’t play out today. In the U.S., jobless claims didn’t surprise negatively. That was a catalyst for a bid to come into stocks.”
U.S. equities joined a global rally and the euro halted an eight-day slump, its longest since 2008. Greece’s Evangelos Venizelos, the socialist Pasok leader and former finance minister, said his goal is to form a government that keeps the nation in the euro area. Investors also watched economic data as initial claims for jobless benefits fell to a one-month low.
Greek political turmoil is in its fourth day after the inconclusive May 6 elections, with coalition talks deadlocked, raising the possibility that another election will have to be held as early as next month. The standoff has reignited European concerns over Greece’s ability to hold to terms of its two bailouts negotiated since May 2010.
“There’s an attempt to patch things together in Greece,” said Michael Strauss, who helps oversee about $27 billion of assets as the chief investment strategist at Commonfund in Wilton, Connecticut. “They will try to stay in the euro, though I’m not sure they can. Greece is a failed chemistry experiment even if they put something together.”
Banks had the biggest gain in the S&P 500 among 24 groups, adding 1.7 percent, as a measure of European lenders rallied. The KBW Bank Index (BKX) rose 1.2 percent as all of its 24 stocks advanced. Citigroup increased 1.5 percent to $30.91. Wells Fargo climbed 2 percent to $33.27.
Bernanke on Banks
Federal Reserve Chairman Ben S. Bernanke said the U.S. banking system is stronger and more resilient while still facing challenges on credit quality and liquidity.
“Banks still have more to do to restore their health and adapt to the post-crisis regulatory and economic environment,” Bernanke said today in a speech at the Chicago Fed’s annual conference on banks. As the economic expansion proceeds, “a financially stronger banking system will be well positioned to expand its lending.”
Some corporate earnings reports also helped drive stocks higher today. Per-share profits have topped projections at about 70 percent of S&P 500 companies that reported results since the start of the earnings season.
News Corp. (NWSA) climbed 5.8 percent to $20.51 after revenue growth at its cable networks and film studio helped it exceed analysts’ third-quarter profit estimates. The owner of Fox Broadcasting and Fox News derives at least 70 percent of its annual profit from television, and is working to expand in markets outside the U.S. with investments in pay-TV operators.
Monster Beverage surged 10 percent to $71.92. Net sales rose 28 percent to $454.6 million as Chief Executive Officer Rodney Sacks expands into international markets, including Hong Kong and Macau last month.
Big Lots Inc. (BIG) gained 1.4 percent to $36.73. The discount retailer was raised to the equivalent of buy at Barclays Plc. The share-price estimate is $43.
Technology shares had the only decline in the S&P 500 among 10 industries. Cisco, the biggest maker of computer-networking equipment, tumbled 10 percent to $16.88. Chief Executive Officer John Chambers said orders from big companies fell in the third quarter, and it’s taking longer to sign large deals with corporate customers. Cisco is also concerned about demand from Europe, India and government agencies, he said.