Technology (S5INFT) shares had the biggest gain among 10 industries in the S&P 500, adding 1 percent. Akamai Technologies Inc. (AKAM), the operator of a server network that lets businesses speed data delivery, and Visa Inc. (V), the world’s biggest payments network, advanced at least 3.7 percent as earnings topped analysts’ projections. United Technologies Corp. (UTX) rallied 2.5 percent as it is said to be studying the sale of a pumps business.
The S&P 500 increased 0.2 percent to 1,351.95 as of 4 p.m. New York time. The benchmark gauge declined as much as 0.4 percent earlier today. The Dow Jones Industrial Average advanced 6.51 points, or 0.1 percent, to 12,890.46. The Russell 2000 Index of small companies lost 0.4 percent to 824.99.
“I’d expect a better performance for stocks,” said Peter Jankovskis, who helps manage about $2.6 billion at Oakbrook Investments in Lisle, Illinois. “If the EU can show that they can deal with a small country with a big problem, then investors may be reassured that some of the larger countries with smaller problems can also be handled.”
Equities rallied around the world after Greece’s government reached a deal on austerity measures required for a 130 billion- euro ($173 billion) financing package. Greece faces a 14.5 billion-euro bond payment on March 20 and is struggling to secure financing to avert a collapse of the economy that could spark a new round of contagion in the euro area.
Earnings Season
Today’s gain put the S&P 500 less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The benchmark gauge climbed 7.5 percent this year, as companies reported earnings that beat analysts’ estimates while better-than-expected data on manufacturing and employment bolstered optimism about the world’s largest economy.
A rally in stocks has pushed market momentum and breadth to levels that suggest any imminent retreat in the S&P 500 will be limited to 3 percent, according to JPMorgan (JPM) Chase & Co.
Michael Krauss, head of technical research at JPMorgan in New York, this week boosted the higher end of his 2012 forecast for the S&P 500 to 1,440, from a November projection of 1,350, after the market had its best start of a year since 1991. While prices may have risen too fast, any pullback will attract investors who missed the rally, limiting the decline, he said.
“There is no setup right now that to me would suggest a 5- to-10 percent correction is imminent,” Krauss said in a note today. “There is nothing worse than underperforming a rising market. Hence, we see 2-to-3 percent corrective ‘non-crisis’ pullbacks will find buyers.”
Akamai, Visa
Akamai jumped 11 percent, the biggest gain in the S&P 500, to $38.06. The company, whose customers include Apple Inc. (AAPL), is benefiting from rising demand for its services as companies seek ways to push data-heavy digital content, such as videos, around the world more quickly.
Visa rallied 3.8 percent to $112.42, a record. Chairman and Chief Executive Officer Joseph W. Saunders is positioning Visa for its next phase of growth after U.S. regulators capped so- called swipe fees, or interchange, that the company charges merchants for debit-card purchases. Visa, which derived about 56 percent of revenue from the U.S. in fiscal 2011, has said it intends to generate more than half from markets abroad by 2015.
United Technologies gained 2.5 percent to $83.78. It is studying the sale of a pump- and compressor-making division to raise cash for the planned purchase of aerospace supplier Goodrich Corp., people with knowledge of the matter said. John Moran, a United Technologies spokesman, declined to comment.
Foreclosure Practices
The KBW Bank Index fell 0.3 percent as 18 of its 24 stocks retreated. Bank of America Corp. (BAC), JPMorgan and three other U.S. banks reached a $25 billion settlement with 49 states and the U.S. government to end a probe of abusive foreclosure practices stemming from the collapse of the housing bubble. Bank of America added 0.6 percent to $8.18. JPMorgan lost 1.2 percent to $37.86. Citigroup Inc. (C) retreated 1.7 percent to $33.66.
Cisco Systems Inc. (CSCO) slumped 2.1 percent, the most in the Dow, to $20. The biggest maker of networking equipment predicted a third-quarter revenue gain of 5 percent to 7 percent. That equates to about $11.4 billion to $11.6 billion, compared with an average estimate of $11.5 billion. Excluding some costs, earnings will be 45 cents to 47 cents a share. Analysts had projected 45 cents.
PepsiCo Inc. fell 3.7 percent to $64.27. The company plans to cut 8,700 jobs and boost marketing spending for its brands by as much as $600 million as Chief Executive Officer Indra Nooyi works to turn around the world’s largest snack-food maker.
Tax-Related
Groupon Inc. (GRPN) sank 14 percent to $21.17. The largest daily- deal site reported a tax-related fourth-quarter loss that analysts hadn’t predicted. Groupon, based in Chicago, has expanded to 47 countries and set up a new international headquarters in Switzerland. That contributed to a higher-than- expected $34.8 million in taxes, Chief Financial Officer Jason Child said.
As global stocks return to a bull market, the losers in the U.S. are companies least tied to economic growth.
For the first time since 1999, S&P 500 utilities, phone companies and providers of consumer staples posted the only monthly losses, slumping at least 1.5 percent with dividends in January, and continued to lag behind this month. It’s a reversal from 2011, when the three defensive industries returned more than 6.3 percent as investors embraced stocks thought to do well during a slowdown.
Riskier Assets
Investors are shifting toward riskier assets as U.S. manufacturing expanded the most since June and the jobless rate fell to a three-year low of 8.3 percent. In 2011, the global equity measure suffered its biggest losses since the subprime- mortgage crisis.
“Last year, investors tended to hide in things which are stable, paying reasonable dividends,” said Sudhir Nanda, a money manager and head of the quantitative equity group at T. Rowe Price Group Inc. in Baltimore, which oversees $489.5 billion. “This year, people looked at the U.S. and said, ‘Things are not really that bad.’ If the economy is humming, people tend to buy more of the sectors which will profit from growth, industrials, materials and things like that.”
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
http://www.bloomberg.com/news/2012-02-09/u-s-stock-index-futures-little-changed-before-ecb-interest-rate-decision.html
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