U.S. Stocks Advance After Two-Day Rally on Fed Comments

 

 
 
 
Dec. 19 (Bloomberg) — Holland & Co. Chairman Michael Holland discusses the markets. He speaks on “Bloomberg Surveillance.” (Source: Bloomberg)

U.S. stocks rose, with the Standard & Poor’s 500 Index headed for its best week in two months, after the Federal Reserve spurred the biggest two-day jump in three years.

Nabors Industries Ltd. and Denbury Resources Inc. advanced at least 5.7 percent to lead energy stocks higher for a fourth straight day. Red Hat Inc., CarMax Inc. and Cintas Corp. climbed after reporting better-than-estimated earnings.

The S&P 500 added 0.3 percent to 2,067.06 at 1:54 p.m. in New York. The benchmark gauge is up 3.2 percent for the week, the most since October and erasing almost all its losses for December. (SPX) The Dow Jones Industrial Average rose 8.67 points, or less than 0.1 percent, to 17,786.82.

Trading in S&P 500 companies was 44 percent above the 30-day average for this time of day. Some futures and options on stocks and indexes are expiring today in a process known as quadruple witching. That often increases volatility and trading volume.

“The Fed set the tone and that what’s fueling the market right now,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “There’s a lack of economic numbers this morning and we’ll probably finish up the week with a little profit-taking. With people taking off for the holidays you may see some price movements with lesser volume.”

Following the Fed’s pledge to be patient on the timing of interest-rate increases, the Bank of Japanheld monetary policy steady today, almost two months after boosting stimulus as Asia’s second-largest economy slumped into a recession. In Europe, almost all economists project the central bank will announce the purchase of large-scale government bonds next year.

Fed Stimulus

U.S. stocks have tripled during the 5 1/2-year bull market, driven by the Fed’s three rounds of bond buying and borrowing costs near zero to stimulate the economy. A slide in oil prices and signs of a global economic slowdown rippled through financial markets earlier this month, wiping more than $1 trillion from U.S. equity values in less than two weeks.

The S&P 500 rallied 4.5 percent in the previous two days as energy shares advanced and Fed Chair Janet Yellen said the central bank will probably hold rates near zero at least through the first quarter.

The rebound in equities may help push the S&P 500 to its seventh consecutive December rally, as investor anxiety is fading. The Chicago Board Options Exchange Volatility Index, the gauge of options prices known as the VIX, slumped 29 percent in the past two days for the biggest slide since January 2013. The index rose 0.9 percent to 16.96 today.

Energy Stocks

Six out of 10 major industries in the S&P 500 advanced, with energy shares leading the way for the third day this week, jumping 1.5 percent.

Nabors Industries climbed 9 percent and Denbury Resources added 5.7 percent. Exxon Mobil Corp. and Chevron jumped more than 1.6 percent for the best performances in the Dow. The energy group has rallied 8.8 percent in four days, the most since 2011.

American Apparel Inc. climbed 4.8 percent after an 82 percent jump in the past three days. A person familiar with the matter said founder Dov Charney is working with a private-equity firm on a bid to acquire the company. The retailer fired him earlier this week.

Red Hat rallied 11 percent and Cintas rose 5.9 percent after posting quarterly earnings that beat analysts’ estimates. The uniform-supply company also increased its annual profit forecast.

CarMax gained 9.6 percent after reporting third-quarter earnings of 60 cents, beating the average analyst estimate of 54 cents.

Nike Inc. slipped 2.6 percent after future orders for the world’s largest sporting-goods maker rose less than analysts had predicted. Demand in western Europe and emerging markets slowed for the delivery period from December through April.

To contact the reporters on this story: Oliver Renick in New York at orenick2@bloomberg.net; Sofia Horta e Costa in London at shortaecosta@bloomberg.net

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net; Jeff Sutherland at jsutherlan13@bloomberg.net Jeff Sutherland