U.S. stocks rose, giving the Standard & Poor's 500 Index its best eight-day gain since 2009, as speculation the economy will keep expanding overshadowed a drop in AT&T Inc. (T) following a government antitrust lawsuit.
Ford Motor Co. (F) and Alcoa Inc. gained at least 2.5 percent as companies most-tied to economic growth rallied. Joy Global Inc. (JOYG) jumped 1.5 percent after the maker of mining equipment forecast more earnings than analysts estimated. AT&T fell 4.2 percent, limiting the market's gain, as the U.S. government sued to prevent its planned purchase of T-Mobile USA Inc., saying the deal would curb competition in the wireless market.
The S&P 500 climbed 0.5 percent to 1,219.42 at 3:45 p.m. in New York after surging 1.5 percent earlier. The benchmark gauge for American equities is up 8.5 percent since Aug. 19 while still headed for its fourth straight monthly loss, the longest slump since March 2008. The Dow Jones Industrial Average added 74.89 points, or 0.7 percent, to 11,634.84 today, erasing its year-to-date decline.
“The stock market is poised for a rebound if data begins to be more encouraging,” Marshall Front, who helps oversee $600 million as chairman of Front Barnett Associates LLC in Chicago, said in an interview. “Stocks have gotten to a point where they are discounting a degree of slowness in the economy that is not likely to evolve.”
Stocks advanced after reports showed U.S. business activity and factory orders expanded at a faster pace than economists forecast. The S&P 500 pared its August decline to about 5 percent, still the biggest monthly retreat since May 2010. U.S. equities rose yesterday after the
Federal Reserve said some policy makers wanted to take more action to stimulate the economy during their meeting this month.
Selling ‘Overdone'
“The economy is not falling off a cliff, and at the same time, policy makers are aware that growth is slow and they are prepared to do something to accelerate it,” Peter Jankovskis, who helps manage about $2.6 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “Much of the selling that we've experienced was overdone and left the market poised for a rally when sentiment began to change.”
The S&P 500 slid 16 percent between July 22 and Aug. 19 after the U.S. government lost its AAA rating at S&P and investors speculated the European debt crisis was intensifying. The index rallied 8.5 percent between Aug. 8 and yesterday after the S&P 500 traded at 12.2 times earnings, the lowest level since 2009, according to data compiled by Bloomberg.
--Bloomberg News--
