All 10 groups (SPXL1) in the S&P 500 advanced as financial, industrial and commodity gauges had the biggest gains. Bank of America Corp. (BAC), General Electric Co. (GE) and Alcoa Inc. increased at least 1.2 percent. A measure of 12 homebuilders (S15HOME) in S&P indexes climbed 4.4 percent as PulteGroup Inc. and Lennar Corp. (LEN) jumped more than 4.6 percent. The Dow Jones Transportation Average, a proxy for economic growth, added 1.4 percent.
The S&P 500 rose 1.1 percent to 1,263.02 at 4 p.m. New York time, almost wiping out yesterday’s slump. The Dow Jones Industrial Average climbed 135.63 points, or 1.1 percent, to 12,287.04 today. About 4.2 billion shares changed hands (MVOLUSE) on U.S. exchanges, or 46 percent below the three-month average.
“We’ve traveled very far this year, but have gotten nowhere,” Todd Lowenstein, a portfolio manager who helps oversee about $16 billion for Highmark Capital Management Inc., said in a telephone interview from Los Angeles. “Investors are getting confident that the U.S. may decouple from some of the European difficulties and not be dragged down into the abyss. The data is quite strong and is validating the point that the U.S. really has a certain amount of engines firing on its own.”
With only one trading day left this year, the S&P 500 (SPX) is up 0.4 percent in 2011. After rising 8.4 percent to start the year and reaching an almost three-year high in April, the benchmark measure for American equities fell as much as 19 percent through Oct. 3 on concern Europe’s debt crisis would derail global growth. Since then, the measure has rallied 15 percent.
Top Performers
Both the S&P 500 and the Dow are among the 10 best performers this year among 91 national indexes tracked by Bloomberg. The Dow has rallied 6.1 percent in 2011. That’s below the average gains of 12 percent in years before presidential elections since its creation in 1896, according to data compiled by Bloomberg and Dow Jones.
Stocks gained today as companies cranked out more goods in December and pending sales of existing homes jumped in November for a second month, pointing to a pickup in U.S. economic growth as 2011 comes to a close. The number of Americans filing claims for jobless benefits dropped to 375,000 on average (INJCJC4) over the past four weeks, the fewest since June 2008, Labor Department figures showed today in Washington.
Investors also watched developments in Europe’s attempt to tame its crisis. Italy auctioned 7.02 billion euros ($9 billion) of bonds, falling short of the target, as borrowing costs declined in its final debt sale of the year.
‘Very Low’
“There were very low expectations for the Italian bond auction,” Madelynn Matlock, who helps oversee about $14.5 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “The fact that they got it off and the price didn’t go up was probably the tiny positive.”
The Morgan Stanley Cyclical Index added 1.5 percent on optimism about economic growth. The KBW Bank Index climbed 2.1 percent as all of its 24 stocks gained.
Bank of America rose 3.3 percent to $5.46, after falling 5.6 percent over the previous two days. GE increased 1.4 percent to $18.07. Alcoa (AA), the largest U.S. aluminum producer, advanced 1.3 percent to $8.63.
All 12 stocks in the S&P Supercomposite Homebuilding Index gained. PulteGroup, the largest homebuilder by revenue, added 6.1 percent to $6.31. Lennar climbed 4.6 percent to $19.86.
Mosaic Co. (MOS) fell less than 0.1 percent to $50.28. The world’s largest producer of phosphate fertilizer said it will cut output by as much as 250,000 metric tons through the first quarter of 2012.
Amazon Falls
Amazon.com Inc. (AMZN) lost less than 0.1 percent to $173.86. The world’s largest Internet retailer may miss fourth-quarter sales estimates, Goldman Sachs Group Inc. predicted, citing slower- than-expected e-commerce growth over the holidays.
Trading of a new class of contracts that expire a week after they’re listed pushed U.S. options volume to a ninth- straight annual record as investors turned to shorter maturities to hedge risk.
About 4.5 billion contracts changed hands through Dec. 27, beating last year by 16 percent, according to data from Chicago- based OCC, which clears and settles equity derivatives. Weekly equity options, which didn’t exist before last year, accounted for 9.3 percent of industry volume for options tied to stocks and exchange-traded funds this year through November, Steve Crutchfield, chief executive officer of NYSE Amex Options, said in a telephone interview Dec. 22.
Exclusive License
One-week contracts on individual equities began trading in June 2010 when NYSE Amex, an exchange owned by NYSE Euronext (NYX), listed them on the PowerShares QQQ Trust, SPDR S&P 500 ETF Trust (SPY), SPDR Dow Jones Industrial Average ETF Trust (DIA) and iShares Russell 2000 Index Fund. CBOE Holdings Inc. (CBOE)’s Chicago Board Options Exchange began short-dated options on the S&P 500 and other benchmark gauges in 2005. Those trade only on the CBOE because of an exclusive license, while weekly options on equities can trade on all nine U.S. exchanges.
“They took off much quicker than we expected,” Randy Frederick, the Austin, Texas-based director of trading and derivatives for Charles Schwab Corp., said in a phone interview Dec. 21. The firm has $1.68 trillion in 8.5 million client accounts. “A good portion of the growth in weeklys has been in the retail segment. It has definitely contributed to volume.”
To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
http://www.bloomberg.com/news/2011-12-29/u-s-stock-futures-are-little-changed-before-italian-debt-sale.html
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