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U.S. Stocks Advance on Increased Optimism

*from, May 14, 2013 (To view original article click here.)

Take Away #1: U.S. stocks rose, with the S&P 500 Index headed for its eighth record high in the past nine sessions, on increased optimism over growth in the world’s largest economy.

Key Facts and Figures:

  • The S&P 500 advanced 0.9% to 1,648.08 at 12:45 p.m.
  • The Dow Jones Industrial Average gained 89.38 points, or 0.6%, to 15,181.06.
  • Trading of S&P 500 stocks was 2.6% below the 30-day average at this time of day.
  • Confidence among small businesses climbed in April to a six-month high as the outlook for the economy and sales brightened, the National Federation of Independent Business’s optimism index showed today.
  • “There’s an encouraging pattern of continued growth in the economic data,” said Alan Gayle of RidgeWorth Capital Management.
  • “What is helping the market is the belief that downside risks to stocks are limited right now,” said Gayle.

Take Away #2: David Alan Tepper, co-founder and owner of Appaloosa Management LP, said that he is bullish and the economy is getting better.

Key Facts and Figures:

  • Tepper led the institutional Investor’s ranking of the top earners in hedge funds last year with $2.2 billion.
  • Tepper said in January that the U.S. “is on the verge of an explosion of greatness.”

Take Away #3: Equity futures slumped earlier as JPMorgan Chase & Co. reduced its second quarter growth forecast for the Chinese economy.

Key Facts and Figures:

  • JPMorgan Chase & Co. reduced its second quarter growth forecast for the Chinese economy to 7.8% from 8% and the full-year estimate to 7.6% from 7.8%.
  • It cited weak domestic demand suggested by April data, after reports yesterday showed China’s fixed-asset investment unexpectedly decelerated last month while industrial output trailed estimates.

Take Away 4: Money managers are the most bearish on commodities in more than four years as a majority expected a weaker Chinese economy for the first time in 14 months, a Bank of America survey showed.

Key Facts and Figures:

  • A net 29% of the fund managers surveyed were underweight the asset class in May as their positions “collapsed” to the lowest level since December 2008.
  • One in four now consider a “hard landing” in China as the biggest risk to their investments.
  • The bank surveyed professional investors who together oversee $517 billion.
  • “There has been a marked uptick” in concern about China, said John Bilton of Bank of America’s Merrill Lynch unit.
  • “A hard landing is not our core scenario, but certainly investors are right to start thinking they should at least hedge some of that tail risk,” said Bilton.

Take Away #5: The U.S. bull market has entered its fifth year.

Key Facts and Figures:

  • The S&P 500 has surged 144% from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Federal Reserve.
  • The Chicago Board Options Exchange Volatility Index, or VIX, rose 2.4% to 12.85.
  • The benchmark gauge for options, which moves in the opposite direction of the S&P 500 about 80% of the time, has fallen 29% this year.
  • The S&P 500 has only fallen 3 times in the past 18 days and is up 3.2% in May, heading for the seventh straight month of gains.

Take Away 6: Financial shares climbed the most among 10 S&P 500 industry groups as hedge-fund manager David Tepper called U.S. banks “a good sector.”

Key Facts and Figures:

  • Financial shares climbed 1.4% as a group.
  • Bank of America added 2.9% to $13.35 for the biggest increase in the Dow.
  • Citigroup increased 2.2% to $49.98.
  • Tepper said his firm still owns stock in Citigroup and other U.S. banks.

Take Away #7: Take-Two Interactive Software Inc., Edwards Lifesciences Corp., and Fusion-io Inc. rallied, while SolarCity Corp. declined.

Key Facts and Figures:

  • Take-Two, publisher of the “Grand Theft Auto” video games, jumped 4.3% to $17.10, after reporting profit that beat analyst estimates.
  • Profit excluding some items was 38 cents a share in the fourth quarter, topping the 23-cent average estimate compiled by Bloomberg, as digital sales almost tripled.
  • Edwards Lifesciences Corp., the biggest maker of aortic heart valves implanted with a catheter, advanced 6.2% to $71.50.
  • The company announced a $750 million share-buyback program, and also said its CFO Thomas M. Abate plans to retire.
  • Fusion-io Inc. (FIO) climbed 4.6% to $15.18 as UBS AG raised its rating on the maker of data storage to buy from neutral.
  • The stock’s drop after the company’s co-founder and CEO resigned last week was overdone, according to UBS analysts led by Steven Milunovich.
  • SolarCity Corp. slid 4.9% to $34.13.
  • The second-largest U.S. solar company by market value posted a first-quarter loss as it bore higher costs from installing rooftop solar systems at little or no charge to customers.

*To view original article from click here.

Filed in: Latest, Markets

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