The S&P 500 (SPX) was little changed in the week’s final trading session after erasing a 1.3 percent gain following an unexpected drop in the U.S. jobless rate. Boeing Co. (BA), JPMorgan Chase & Co. (JPM) and Caterpillar Inc. (CAT) jumped more than 11 percent to lead the Dow Jones Industrial Average (INDU)’s weekly advance. Energy producers and financial companies led a surge by all 10 industries in the S&P 500 and added at least 9.4 percent. Amazon.com Inc. (AMZN) jumped 7.5 percent after record Black Friday sales of its Kindle products.
The S&P 500 climbed 7.4 percent to 1,244.28 since Nov. 25, snapping a two-week decline to trim its 2011 loss to 1.1 percent. The Dow added 787.64 points, or 7 percent, to 12,019.42 this week and is up 3.8 percent for the year.
“This week’s move was sparked by the global coordinated efforts by central banks and the greater clarity provided by European policy makers on plans to stabilize the debt situation,” Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel Nicolaus & Co., which oversees more than $116 billion in client assets, said in a telephone interview. “U.S. retail sales reports provided greater confirmation of stability within the U.S. economy.”
The S&P 500 surged after the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut the proportion that banks need to hold as reserve capital. Germany and France are leading a push for tougher enforcement of euro-area budget rules to counter the debt crisis now in its third year.
13% Rebound
The stock index has rebounded more than 13 percent from its 2011 low on Oct. 3. Improving U.S. economic data has helped alleviate concern that the world’s largest economy will relapse into a recession as Europe’s debt crisis threatens to derail the recovery.
The S&P 500 jumped 2.9 percent on Nov. 28 after U.S. retail sales during the Thanksgiving weekend increased 16 percent to $52.4 billion, the National Retail Federation said, citing a survey conducted by BIGresearch. The average shopper spent $398.62, up from $365.34 a year earlier. A Nov. 29 report showed that consumer confidence snapped back more than forecast in November as Americans turned less pessimistic on the outlook for jobs.
Improving Data
Jobs data released by the Labor Department Dec. 2 showed that payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary help agencies, after a revised 100,000 rise in October that was more than initially estimated. The median estimate in a Bloomberg News survey called for a gain of 125,000. The jobless rate declined to 8.6 percent, the lowest since March 2009, from 9 percent.
The Citigroup Economic Surprise Index for the U.S. has risen to the highest level since March 9. The gauge, which measures the rate at which data is beating or missing economist forecasts in Bloomberg surveys, reached 85.7 and has rebounded from a more-than two-year low of minus 117.2 in June.
Barton Biggs, who trimmed bullish bets in September before U.S. stocks posted the biggest monthly gain since 1991, said that while he doesn’t want to be fully invested in equities, “it’s hard to get really bearish.”
‘Too Much Bearishness’
“Except for Europe, the rest of the world economy is doing pretty well,” the hedge-fund manager said Dec. 2 during an interview on Bloomberg Radio’s “Surveillance” with Tom Keene and Ken Prewitt. “There’s too much bearishness, and equities -- particularly U.S. equities and emerging-market equities -- are very cheap relative to fixed income, Treasury bonds, high yield, other financial assets.”
All 10 groups in the S&P 500 rose this week, led by a 10 percent rally in energy producers as crude oil had its first gain in three weeks. The Morgan Stanley Cyclical Index surged 9.6 percent amid easing concern about global economic growth.
Boeing, the world’s largest aerospace and defense company, added 14 percent to $71.30. Caterpillar, the world’s largest construction and mining-equipment maker, rose 11 percent to $96.29.
Alpha Natural Resources Inc. (ANR) jumped the most in the S&P 500, adding 28 percent to $24.11, while U.S. Steel Corp. (X) rallied 25 percent, the third-most in the index, to $27.81.
Financial shares rose 9.5 percent, the second-most among 10 industries in the S&P 500. JPMorgan jumped 14 percent to $32.33. Goldman Sachs Group Inc. (GS) surged 9.6 percent to $97.25. A gauge of European banking shares climbed 14 percent, the second-best performance among 19 groups in the benchmark Stoxx Europe 600 Index.
VIX Retreats
The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, tumbled 20 percent to 27.52, the lowest level in a month.
Amazon.com rose 7.5 percent to $196.03. The world’s largest Internet retailer said it sold four times more Kindle products on Black Friday compared with last year.
Western Digital Corp. (WDC) climbed 26 percent, the second-most in the S&P 500, to $31.44. The U.S. maker of disk drives and networking products raised its quarterly revenue forecast to at least $1.8 billion from at most $1.25 billion after rebounding from a flood in Thailand that devastated factories and constrained supplies.
Hospira Inc. (HSP) fell the most in the S&P 500, slipping 8.1 percent to $27.64. The maker of generic injectable drugs may face “widespread” production breakdowns that could take two to three years to correct, an analyst at RBC Capital Markets LLC said. Hospira’s depressed valuation may attract takeover interest from competitors, said Capstone Investments.
To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Kaitlyn Kiernan in New York at kkiernan2@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
http://www.bloomberg.com/news/2011-12-02/s-p-500-gains-most-since-march-2009-on-bank-action-retail-sales.html
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