Bank of America, the second-largest U.S. lender, climbed 2.4 percent. Morgan Stanley added 5.4 percent after the owner of the largest brokerage reported a smaller-than-estimated loss. Union Pacific Corp. (UNP) jumped 2.2 percent to the highest level since 1980 as the biggest U.S. railroad’s profit beat forecasts. Eastman Kodak Co. tumbled 46 percent in over-the-counter trading after the photography pioneer filed for bankruptcy.
The S&P 500 added 0.5 percent to 1,314.50 at 4 p.m. New York time. The Dow Jones Industrial Average gained 45.03 points, or 0.4 percent, to 12,623.98. The Nasdaq-100 Index rose 0.7 percent to 2,441.70, the highest level since 2001. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against losses in the S&P 500, declined below 20 for the first time since July.
“There has been some relief that financials might be along for the ride,” Brian Jacobsen, who helps oversee about $209 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. “A lot of the pessimism has been baked into the cake. We’re more likely to see positive surprises.”
Of the 35 companies in the S&P 500 that reported results since Jan. 9, 22 posted per-share earnings that beat projections, according to data compiled by Bloomberg. The S&P 500 has gained 4.5 percent so far in 2012, the most since it rose 4.8 percent over the first 12 days in 1997, according to data compiled by Bloomberg.
Economic Data
Today’s rally in stocks was helped by optimism that the U.S. economy will be able to weather Europe’s debt crisis. Claims for jobless benefits last week dropped to the lowest level since April 2008, pointing to an improvement in the U.S. job market that may help bolster spending in the new year.
“We’re in a fragile economy, we’re not going to have robust growth, but it’s going to take us a lot of things to derail,” Richard Weeks, the Vienna, Virginia-based managing director and partner at HighTower’s VWG Wealth Management. His firm oversees about $20 billion. “You’ve seen big corporations navigate through very difficult times.”
The Dow Jones Transportation Average, a proxy for the economy, increased 1.6 percent. Gauges of diversified financial and transportation shares added at least 1.5 percent, leading the gains among 24 industries in the S&P 500.
Raising Capital
Bank of America rallied 2.4 percent, the most in the Dow, to $6.96. Chief Executive Officer Brian T. Moynihan is cutting assets, expenses and staff while raising capital to meet demands from regulators for a larger cushion against unexpected losses.
Morgan Stanley (MS) climbed 5.4 percent to $18.28. Morgan Stanley posted the only increase in trading revenue excluding accounting gains among the five largest Wall Street banks in 2011, making progress toward Chairman and Chief Executive Officer James Gorman’s goal of boosting market share.
Union Pacific gained 2.2 percent to $112.18. Carloads advanced 3 percent in the quarter, with auto and chemical shipments leading gains as a strengthening recovery boosted demand. Energy and industrial products deliveries also rose.
EBay Inc. (EBAY) jumped 3.9 percent to $31.51. The largest Internet marketplace reported sales and profit that topped analysts’ estimates, buoyed by a campaign to promote its expanded retail offerings and broader use of the PayPal online- payments service.
Technology Results
Some of the largest technology companies reported results after the market closed today.
Intel Corp. (INTC), the biggest chipmaker, predicted revenue that may top estimates. International Business Machines Corp., the largest computer-services provider, and Microsoft Corp. (MSFT), the biggest software maker, reported earnings that beat forecasts. Google Inc. (GOOG), owner of the most popular Internet search engine, reported revenue that fell short of analysts’ projections.
Intel rose 0.4 percent to $25.73, while IBM (IBM) added 2.5 percent to $185.01, and Microsoft jumped 1.8 percent to $28.62 at 5:09 p.m. New York time. Google tumbled 8.5 percent to $585.26 after the close of regular trading.
Sears Holdings Corp. (SHLD) advanced 9.8 percent to $43.35 following a report that CIT Group Inc. will approve financing for the retailer’s vendors as soon as today. CIT is looking for more detailed information on Sears’s financing and may require letters of credit for all orders, Women’s Wear Daily reported, citing unidentified people familiar with the plan. CIT is the largest U.S. company that provides what’s known as factoring.
Higher Forecast
Credit Suisse Group AG (CSGN)’s Andrew Garthwaite lifted his 2012 forecast for the S&P 500 to 1,400, citing the European Central Bank’s refinancing plans for banks as a “potential game changer.” Garthwaite, the London-based global equity strategist at the firm, had previously estimated the benchmark gauge for U.S. equities would climb to 1,340 at the end of 2012.
Eastman Kodak Co. (EK) slumped 46 percent to 30 cents in over- the-counter trading. The Rochester, New York-based company, which traces its roots to 1880, listed assets of $5.1 billion and debt of $6.8 billion in Chapter 11 documents filed in U.S. Bankruptcy Court in Manhattan. The company’s stock symbol changed today to “EKDKQ” from “EK.”
Johnson Controls Inc. (JCI) plunged 8.8 percent to $32.46. The largest U.S. auto supplier lowered its forecast for profit for the fiscal year on weakening demand for replacement batteries and a reduced outlook for vehicle assembly in Europe.
Solar companies slumped after Germany said it will make monthly subsidy cuts to slow demand for panels in the country, the world’s largest market. Suntech Power Holdings Co., the biggest solar-panel maker, fell 14 percent to $3.20. First Solar Inc. (FSLR) declined 10 percent to $38.70.
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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