U.S. stocks advance on Chinese economy, optimism over Syria

September 10, 2013 11:31 AM

U.S. stocks climbed, extending the longest winning streak for the Standard & Poor’s 500 Index (CME:SPU13) since July, as data showed China’s economy is improving amid signs of easing tensions over Syria.

Goldman Sachs Group Inc., Visa Inc. and Nike Inc. jumped more than 1.6% as the three companies will be added to the Dow Jones Industrial Average, replacing Bank of America Corp., Hewlett-Packard Co. and Alcoa Inc. McDonald’s Corp. climbed 0.4% as sales at stores open at least 13 months topping estimates. Apple Inc. tumbled 1.9% as the world’s biggest technology company unveiled new iPhone models.

The S&P 500 advanced 0.6% to 1,681.70 at 2:52 p.m. in New York. The index has gained for six straight days, the most since July 15. The Dow rose 109.88 points, or 0.7%, to 15,173 today. Trading in S&P 500 stocks was 16% higher than the 30-day average at this time of day.

“The news from Syria is positive and we had decent economic data out of China,” Gary Flam, a portfolio manager at Bel Air Investment Advisors LLC in Los Angeles, said in a phone interview. His firm oversees $7 billion. “Investors came into September cautiously positioned, but one by one their concerns are being removed or lessened.”

The S&P 500 has risen 3% in the first six trading days of the month, recovering from a drop of as much as 4.6% since a record high on Aug. 2. The benchmark index declined amid concern over a possible military strike against Syria and the prospect for the Federal Reserve scaling back its monetary stimulus.

Russian Plan

France said it will submit a Russian-backed plan to confiscate Syria’s chemical weapons to the United Nations, as Interfax reported that Bashar al-Assad’s government accepted the proposal.

President Barack Obama is scheduled to outline his intentions on Syria in a speech at 9 p.m. tonight in Washington. New York-based Human Rights Watch said in a report today that the Syrian government is the probable perpetrator of a chemical weapons attack on Aug. 21 that killed hundreds of people in the suburbs of Damascus.

Stocks rose earlier today after China’s industrial output rose 10.4% in August from a year earlier and retail sales gained 13.4%, the National Bureau of Statistics said today. Both results exceeded economists’ estimates. The S&P 500 climbed yesterday and the Dow surged the most in two months as China’s exports topped forecasts.

Fed Meeting

The Fed is watching economic data ahead of its Sept. 17-18 meeting as it considers reducing its monthly $85 billion in asset buying. The S&P 500 has rallied as much as 153% since the beginning of the bull market in March 2009 as the central bank continued to provide stimulus to the economy.

Economists estimate the Fed this month will taper its monthly bond buying by $10 billion, to $75 billion, according to the median of 34 responses in a Bloomberg News survey.

The Chicago Board Options Exchange Volatility Index, or VIX, dropped 5.3% to 14.81. The equity volatility gauge is down 13% in September after rallying 26% in August, the biggest monthly gain since May 2012.

The Dow Jones Transportation Index jumped 1.6% to the highest level in a month. Shares in companies whose earnings are most closely tied to economic growth rose, sending the Morgan Stanley Cyclical Index up 1.5% to the highest level since the gauge started in 1978. Financial and industrial shares rallied the most among 10 groups in the S&P 500, adding at least 1%.

General Electric Co. advanced 2.2% to $23.90 for the biggest gain in the Dow. Microsoft Corp. climbed 1.9% to $32.26, United Technologies Corp., the maker of Pratt & Whitney jet engines and Sikorsky helicopters, increased 1.5% to $106.07.

Dow Members

Goldman Sachs climbed 3.5% to $165.14. Nike jumped 1.6% to $66.47 and Visa increased 2.9% to $183.72. Hewlett-Packard lost 0.7% to $22.20. Alcoa slipped 0.3% to $8.06. Bank of America added 1.1% to $14.64.

The changes to the Dow, announced by S&P Dow Jones Indices, will take place after the close of the market on Sept. 20, and will be the first reshuffling of the gauge since September 2012.

McDonald’s climbed 0.4% to $96.84. The world’s largest restaurant chain said same-store sales increased 1.9% last month, helped by demand in Europe. Analysts projected a 0.3% increase, the average of 16 estimates from Consensus Metrix. McDonald’s said it benefited from demand in France and Russia as well as the introduction of blended-ice beverages in the U.K.

Apple Presentation

E*Trade Financial Corp. soared 4.2% to $17.21, the highest level since February 2011. The online brokerage said its daily average revenue-generating trades rose 5% in August compared to the previous month and the stock was upgraded to outperform from neutral at Macquarie Group Ltd.

Apple tumbled 1.9% to $496.34. The company unveiled a cheaper $99 version of the iPhone in bright colors and an updated high-end device, in a strategy shift by Chief Executive Officer Tim Cook to reach a broader range of customers around the world as competing devices running Google Inc.’s Android software gain in popularity.

“The competition has caught up and it’s now purely about how quickly it can innovate and drive its own experience forward,” said Benedict Evans, an analyst with Enders Analysis in London.

Apple also said it was adding Japan’s largest carrier, NTT DoCoMo Inc., and that it would have devices available upon introduction in China for the first time. The company is near a deal with China Mobile Ltd., the world’s largest carrier, people familiar with the plans have said.

Urban Outfitters Inc. fell the most in the S&P 500, losing 9.6% to $38.63. The teen-clothing retailer said third- quarter comparable sales so far are growing at a mid-single- digit pace. Janney Montgomery Scott LLC last week estimated the company would report that the sales were running at a “high- single digit” rate.

www.bloomberg.com

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