NEW YORK – U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for the first time in five days, as American jobless claims slid to a four-year low and Italy’s bond yields fell after a debt sale.
Bank of America Corp. and JPMorgan Chase & Co. advanced at least 1 percent after a report the European Union may push back the deadline for applying tougher Basel bank-capital rules for as long as a year. Commodity and financial stocks posted the biggest rallies out of 10 groups in the S&P 500. Sprint Nextel Corp. jumped 13 percent as it confirmed it’s in talks with Japan’s Softbank Corp. about a potential transaction.
The S&P 500 added 0.4 percent to 1,437.85 at 12:26 p.m. in New York. The benchmark gauge fell to the lowest level in a month yesterday on concern that the global economy is slowing down and will hurt corporate earnings. The Dow Jones Industrial Average rose 23.85 points, or 0.2 percent, to 13,368.82 today. Trading in S&P 500 companies was 20 percent above the 30-day average at this time of day.
The claims report “is consistent with the improving jobs numbers and consumer confidence we’ve been seeing,” Brian Gendreau, a market strategist at El Segundo, California-based Cetera Financial Group Inc., said in a telephone interview. The firm has about $20 billion in assets under management. “It just adds to the picture of a U.S. economy that’s recovering. Not as fast as anyone would like, but still improving.”
Stocks extended gains after Labor Department figures showed fewer Americans than forecast filed first-time claims for unemployment benefits last week. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey.
One state
One state accounted for most of the plunge in claims, a Labor Department spokesman said. The breakdown by state will show up in next week’s report.
“The economy is improving, we’re doing a better job,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said by phone. “I think we should be going faster but this is a phenomenal claims number. So now the question is, ‘Is this number real or is it going to get revised away next week?’”
A report showed the U.S. trade deficit widened by 4.1 percent to $44.2 billion from $42.5 billion in July as slower global growth reduced demand for American exports, Commerce Department figures showed.
Moderate expansion
The Federal Reserve said yesterday that the U.S. economy expanded “modestly” last month, supported by improvements in housing and auto sales, even as the labor market showed little change. The S&P 500 has slipped 1.7 percent since reaching an almost five-year high of 1,465.77 on Sept. 14. The benchmark index is still up 15 percent for the year.
Stocks were also bolstered today as strategists at Citigroup Inc. upgraded U.S. equities to overweight, citing “aggressive” central-bank stimulus plans and strong momentum in companies’ earnings per share. They also predicted a 9 percent rally in the MSCI All-Country World Index by the end of next year.
European equities climbed earlier as Italy sold 3.75 billion euros ($4.8 billion) of its benchmark three-year bonds at 2.86 percent. Investors bid for 1.67 times the amount offered, up from 1.49 times last month. S&P yesterday cut Spain’s debt rating to one level above junk, citing economic and political risks as the government considers a second bailout.
“We’ve had a bit of a pullback so we have some people coming in and buying,” Joe Bell, a senior equity analyst at Schaeffer’s Investment Research, a Cincinnati, Ohio-based firm, said by phone. “After S&P downgraded Spain, we had an initial sell-off but a lot of the overseas markets rebounded quite well and we saw that reflected in U.S. equities as well. It’s never good when that happens, but often times these rating agencies seem to behind the bone and perhaps it was priced in.”
Bank of America, the second-largest U.S. bank by assets gained 1.4 percent to $9.34. JPMorgan Chase, the largest bank, rose 1 percent to $42.18. The EU may push back the deadline for applying tougher Basel bank-capital rules after warnings from lenders that pressing ahead with the original timetable may drive up their costs, according to three people familiar with the talks.
JPMorgan and Wells Fargo & Co. are scheduled to report quarterly earnings tomorrow. Analysts forecast Wells Fargo, the largest U.S. home lender, will post record profit. The San Francisco-based company added 0.5 percent to $35.40.
Sprint soars
Commodity and financial companies jumped at least 0.8 percent among 10 groups in the S&P 500. Investors bought shares of companies most tied to economic growth as the Morgan Stanley Cyclical Index gained 0.9 percent, halting three days of losses.
Sprint Nextel Corp. jumped 13 percent, the biggest gain in the S&P 500, to $5.72. Softbank, Japan’s third-largest mobile phone company, is in discussions regarding a potential substantial investment that could involve a change in control of Sprint, the U.S. company said in a statement. Softbank is seeking two-thirds of Sprint, according to a person familiar with the matter.
Clearwire Corp., which has a joint venture with Sprint, rallied after CNBC reported Softbank is also expected to buy the company. Shares surged 32 percent to $1.72. MetroPCS Communications Inc., which Sprint has considered buying, slumped 5 percent to $11.44.
Fastenal, Oshkosh
Fastenal Co. jumped 8.2 percent to $45.79. The largest U.S. retailer of nuts, bolts and other fasteners reported sales in the third quarter were $802.6 million, exceeding the average analyst estimate of $801.4 million. Daily sales growth in September was 13 percent, up from 12 percent in the prior month.
Oshkosh Corp. soared 11 percent to $29.90 after billionaire activist investor Carl C. Icahn offered to buy the U.S. military’s biggest supplier of blast-resistant trucks for $32.50 a share. Icahn is the largest shareholder of the Wisconsin-based company, according to Bloomberg data. Navistar International Corp., another truckmaker in which Icahn is the third-largest holder, also rose, increasing 5.4 percent to $23.17.
Realogy Holdings Corp. climbed 24 percent to $33.52 in its trading debut. The real-estate brokerage company controlled by Apollo Global Management LLC raised $1.08 billion in its initial public offering, pricing the shares at the top of the planned range. Shares had been offered for $23 to $27 each.
Safeway Inc. tumbled 3 percent to $15.80. The second- largest U.S. grocery store chain posted third-quarter sales that trailed analysts’ estimates as bargain-hunting shoppers made it harder to boost prices.
