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U.S. Stocks Rise, Extending Biggest December Rally Since 1991

Wednesday, 29 Dec 2010 10:06 AM

 

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U.S. stocks rose, with the Standard & Poor’s 500 Index extending its biggest December rally since 1991, on speculation economic growth will accelerate next year.

Cisco Systems Inc. and Pfizer Inc. were the biggest gainers in the Dow Jones Industrial Average, rising 0.6 percent each. BJ’s Wholesale Club Inc. jumped 5.9 percent after the New York Post said it may receive a takeover bid. Goldman Sachs Group Inc. and Morgan Stanley declined after Mike Mayo, an analyst, reduced earnings estimates.

The S&P 500 gained 0.2 percent to 1,260.95 as of 9:35 a.m. in New York. The Dow average climbed 30.80 points, or 0.3 percent, to 11,606.34.

“We are going to have more of the same next year,” said Thomas Steinemann, chief strategist at Vontobel Asset Management Ltd. in Zurich, whose parent company manages about $80 billion. “There is enormous fiscal stimulus. Where it all leads is another question but the surprise is probably on the upside for the economy and for equities.”

The S&P 500 has rallied 6.6 percent this month, rising above the 1,251.70 close on Sept. 12, 2008, the last trading day before Lehman Brothers Holdings Inc. filed the world’s biggest bankruptcy and prompted a 46 percent drop for the benchmark gauge through March 2009.

Spur Growth

The index has surged 20 percent since Federal Reserve Chairman Ben S. Bernanke suggested on Aug. 27 that he was prepared to purchase more bonds to spur economic growth, a second round of quantitative easing that the central bank eventually announced in November, while President Barack Obama this month agreed to extend tax cuts to aid the recovery.

The S&P 500 may end 2011 at 1,374, or 9.2 percent higher than yesterday’s close, according to the average of 11 analysts in a Bloomberg survey.

Trading volumes dipped this week as a snowstorm hit the U.S. east coast after the Christmas holiday break. About 468 million shares changed hands on the NYSE Dec. 27, the fewest for a full-day session since May 1998, while 560 million shares were traded in yesterday’s session.

As many as 1.2 million airline customers may have been affected by almost 8,000 flight cancellations as the storm that hit three days ago closed major airports.

Economic Reports

Reports tomorrow may provide more evidence about the strength of the economic recovery. The Institute for Supply Management-Chicago Inc. may report that businesses in the U.S. expanded in December for a 15th consecutive month, while pending sales of previously owned homes probably rose 2 percent in November from the prior month, according to Bloomberg surveys of economists.

Cisco Systems rose 0.6 percent to $20.47, while Pfizer gained 0.6 percent to $17.69.

BJ’s jumped 5.9 percent to $47.09. Private-equity firm Leonard Green & Partners LP may present a hostile takeover bid for the third-largest U.S. wholesale chain if the retailer doesn’t auction itself up “in the coming weeks,” the New York Post said, citing unidentified sources.

Goldman Sachs declined 0.2 percent to $168.94 and Morgan Stanley fell 0.5 percent to $27.51. Mike Mayo at Credit Agricole Securities USA Inc. lowered fourth quarter earnings estimates for the two securities firms citing lower-than-expected trading in their fixed-income, currencies and commodities units.

Ultralife Corp., which provides energy and communications products, fell 11 percent to $6.26. The company said it may have 2010 sales of about $177 million, trailing a forecast for revenue of $179.3 million in a Bloomberg survey of analysts.

Hemispherx Biopharma Inc. retreated 0.1 percent to 51 cents. The Philadelphia-based maker of a treatment for genital warts said that it will restate financial statements for this year and last.

--With assistance from Nikolaj Gammeltoft and Inyoung Hwang in New York. Editors: Joanna Ossinger

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net. Elizabeth Stanton in New York at estanton@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

© Copyright 2014 Bloomberg News. All rights reserved.

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