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S&P 500 Rises to Record as Consumer, Tech Shares Rally

By Callie Bost and Joseph Ciolli
April 01, 2014 4:34 PM EDT 112 Comments
Traders work on the floor of the New York Stock Exchange on March 28, 2014.
Photographer: Spencer Platt/Getty Images
Traders work on the floor of the New York Stock Exchange on March 28, 2014.

U.S. stocks rose, as consumer and technology shares pushed the Standard & Poor’s 500 Index to an all-time high, after an increase in a manufacturing index boosted optimism the economy withstood severe winter weather.

Cisco Systems Inc. jumped 3.9 percent, the most since May, to lead technology shares higher. Celgene Corp. rallied 5 percent to pace gains among biotechnology stocks after entering a cooperation with a cancer-drug research firm. MGM Resorts International added 2.6 percent to lead casino stocks higher after Macau gambling revenue increased last month. Ford Motor Co. climbed the most since 2012 after March sales topped estimates.

The S&P 500 gained 0.7 percent to 1,885.52 at 4 p.m. in New York. The Dow Jones Industrial Average rose 74.95 points, or 0.5 percent, to 16,532.61, the highest close this year. The Nasdaq Composite Index jumped 1.6 percent for a third day of gains. About 6.5 billion shares changed hands on U.S. exchanges, 6 percent lower than the three-month average.

“As we head into April and new highs potentially on the horizon, it is looking like the bulls once again are taking control,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, wrote in an e-mail. “March was a tale of two markets, as the S&P 500 held up well, but areas like tech and small caps were hit very hard. After a very rough March, those areas are seeing well-deserved, oversold bounces.”

1,880 Level

Today marks the fifth time in the past month the S&P 500 climbed above 1,880. The gauge was unable to maintain that level by the end of the session in the prior four times. The index reached its previous closing high of 1,878.04 on March 7.

Eight of 10 main industries in the S&P 500 advanced today, with consumer-discretionary shares adding 1.4 percent to lead gains.

TripAdvisor Inc. and Expedia Inc. rallied more than 4.7 percent. Priceline.com, which changed its name today to Priceline Group, jumped 5 percent.

The iShares Nasdaq Biotechnology exchange-traded fund jumped 2.2 percent, adding to a 3.1 percent rally yesterday. The fund had surged 89 percent to a record in the 12 months ended Feb. 25 before sinking 5.1 percent through March 28.

The Russell 2000 (RTY) Index of small companies added 1.3 percent after a 1.8 percent rally yesterday. The gauge sank 3.5 percent last week and lost 0.8 percent in March.

The Nasdaq Composite Index’s rally comes after the gauge of technology stocks plunged 2.5 percent in March for its worst month since October 2012.

Data Watch

The Institute for Supply Management’s index increased to 53.7 in March from 53.2 a month earlier, showing the industry was mending at the close of a winter-depressed first quarter, according to a report today.

Reports from hiring to factory output had shown weakness this year as freezing temperatures and mountains of snow kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders.

The signs of economic improvement come as Federal Reserve Chair Janet Yellen yesterday signaled the central bank’s unprecedented monetary stimulus would be needed for “some time” because of “considerable slack” in the labor market. She cited large numbers of partly unemployed workers, stagnant wages, lower labor-force participation and longer periods of joblessness.

The S&P 500 rose 0.8 percent yesterday on Yellen’s remarks, capping a 1.3 percent gain in the first three months of 2014 for a fifth straight quarterly advance. The government’s monthly jobs report for March is due April 4.

Weather-Related

“People are looking for confirmation that the weakness we saw earlier in the year was, in fact, weather-related,” Walter Todd, who oversees about $990 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said by phone. “Seeing better data confirms that it was a temporary slowdown in the economy and we should see a pickup.”

Equities began the day higher as data from China and Europe boosted optimism about growth prospects. In China, a purchasing managers’ manufacturing index by HSBC Holdings Plc and Markit Economics fell to its lowest level since July. The weakness in the world’s second-biggest economy could prompt the Communist Party leadership to roll out additional support measures.

Growth in euro-area manufacturing stayed near a three-year high in March, according to another report.

The Chicago Board Options Exchange Volatility Index (VIX), a gauge for U.S. stock volatility known as VIX, retreated 5.6 percent to 13.10. The index has fallen four straight days and closed at the lowest level since January.

Gambling Stocks

Casino stocks advanced after a report indicated that revenue from Macau’s gambling industry rose 13.1 percent last month, topping estimates.

MGM Resorts added 2.6 percent to $26.53, while Las Vegas Sands Corp. advanced 2.4 percent to $82.75 and Wynn Resorts Ltd. climbed 2.3 percent to $227.18.

Celgene gained 5 percent to $146.60. The pharmaceutical company announced a 3.5-year strategic collaboration with Forma Therapeutics Inc., according to a statement today.

Intuitive Surgical Inc. soared 13 percent to $493.60 for the biggest gain in the S&P 500. (SPX) The maker of surgery tools said the Food and Drug Administration cleared a new system for use in the U.S.

Ford jumped 4.6 percent to $16.32, the highest since January. The second-largest U.S. carmaker said deliveries rose 3.3 percent to 243,417 cars and light trucks last month. Ford’s F-Series pickups gained 5.1 percent to 70,940, while Fusion sales rose 8.8 percent to 32,963.

GM Recalls

General Motors Co. fell 0.2 percent to $34.34 after losing 16 percent in the first quarter. The automaker yesterday announced a new recall of 1.5 million vehicles for faulty power steering, doubling recall-related charges to $750 million.

Chief Executive Officer Mary Barra testified today before the U.S. House today in hearings focused on the automaker’s faulty ignition switches that led to a recall of 2.6 million vehicles linked to the deaths of 13 people. She said the company has retained Kenneth Feinberg as a consultant to explore options for families of accident victims.

GM March U.S. sales rose 4.1 percent, topping the 0.8 percent increase estimated by analysts. The company had earlier delayed the release because of a systems issue.

United Continental Holdings Inc. added 5.1 percent to $46.90. UBS raised its rating on the carrier to buy from neutral, predicting a benchmark measure for revenue will grow at a faster pace, starting in the second quarter of this year.

To contact the reporters on this story: Callie Bost in New York at cbost2@bloomberg.net; Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron

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