U.S. Stocks Rise as Roubini Reiterates That Recession Is Ending
July 16 (Bloomberg) -- U.S. stocks rose for a fourth day, the longest streak in six weeks, as economist Nouriel Roubini said the worst of the financial crisis is over and reiterated that the recession may end this year, while takeover speculation lifted commodity shares.
Mosaic Co. rallied 12 percent, the most since December, on a report Vale SA may bid $25 billion for the fertilizer maker. United Parcel Service Inc. and General Electric Co. led industrial shares to the best gain among 10 groups as Roubini, the New York University professor who predicted the financial crisis, said a second government stimulus plan would help broaden the economic recovery.
The S&P 500 increased 0.9 percent to 940.74 at 4:05 p.m. in New York, capping its best four-day rally since March. The Dow Jones Industrial Average added 95.61 points, or 1.1 percent, to 8,711.82. European and Asian shares advanced.
"The optimism that people are starting to embrace is that the recession may be months away from ending," said David Goerz, who oversees $17 billion as chief investment officer at Highmark Capital Management in San Francisco. "Even the most bearish forecasters are starting to capitulate."
Financial shares led the market lower earlier on concern commercial lender CIT Group Inc. will have to file for bankruptcy protection and after JPMorgan Chase & Co. said its credit-card business probably won't make money next year. The S&P 500 reversed its loss as Roubini said the world's largest economy will recover from the recession by the end of 2009.
No Train, For Once
"The freefall of the economy has stopped," Roubini said at a Chilean investors' conference in New York. "There is light at the end of the tunnel. And the light at the end of the tunnel for once is not the one of an incoming train."
Roubini said July 9 that the recession would last another six months. He spoke at an event held at Bloomberg News's headquarters in New York. After the close of trading, Roubini said his comments today were a reiteration of his view that the contraction would last 24 months.
The gains added to yesterday's rally that sent the Dow up 3.1 percent, its steepest advance in three months, after Intel Corp. forecast sales that beat analysts' estimates and gauges of manufacturing improved. The S&P 500 has risen 7 percent so far this week as better-than-estimated retail sales boosted consumer shares and results at companies from Goldman Sachs Group Inc. to Johnson & Johnson beat analysts' estimates.
Beating Estimates
Earnings have topped estimates by an average of 24 percent for the 28 companies in the S&P 500 that released results since July 8. Analysts estimate profits fell an average 35 percent in the second quarter and will decrease 21 percent from July through September, according to data compiled by Bloomberg. The S&P 500, the benchmark index for U.S. equities, has rallied 39 percent from its 12-year low on March 9 amid speculation the economy is recovering.
Mosaic, which is majority owned by Cargill Inc., surged 12 percent to $49.98 as O Estadao de S. Paulo reported Vale SA, Brazil's largest mining company, is considering bidding for the North American fertilizer producer in a deal valued at $25 billion. BHP Billiton Ltd. also is interested in buying the company, the paper reported without saying where it got the information.
Freeport-McMoran Copper & Gold Inc. gained for the fourth straight day. The world's biggest publicly traded copper producer added 5.7 percent to $53.82.
Rally by Technology
Technology shares climbed as a group for a seventh straight day, the longest streak since September 2007. SanDisk Corp., the biggest maker of flash-memory cards used in digital cameras and mobile phones, added 9.1 percent to $17.67. The company will benefit from increasing demand for mobile Internet devices, said CNBC's "Mad Money" host Jim Cramer, who recommended the shares. Broadpoint AmTech also increased its share-point estimate on SanDisk to $21 from $19.
Shares of CIT, the 101-year-old commercial lender, tumbled 75 percent to 41 cents. The company said "there is no appreciable likelihood of additional government support being provided over the near term." The New York-based company, once the biggest independent commercial lender, may need as much as $6 billion to avoid seeking bankruptcy protection, CreditSights Inc. said.
JPMorgan Chase & Co. slipped 0.4 percent to $36.13. The second-largest U.S. bank probably won't make money from its credit card business next year, Chief Executive Officer Jamie Dimon said on a conference call. Credit card services account for about a quarter of the company's revenue, according to Bloomberg data.
Investment Banking
JPMorgan shares fell even after the bank reported better- than-expected second-quarter results. Profit climbed 36 percent, surpassing analysts' estimates, as investment-banking fees rose to a record.
Bank of America, which is set to report results tomorrow, slid the most on the Dow, losing 1.9 percent to $13.17. The biggest U.S. bank by assets said net charge-offs on its credit- card trust rose in June. Financial shares in the S&P 500 declined 0.2 percent collectively.
Motorola Inc. slumped 4.2 percent to $6.33. The biggest U.S. mobile-phone maker was downgraded to "neutral" from "buy" by Goldman Sachs Group Inc., which said the stock's price already reflected the prospect that the company's handset business may break even next year.
Finnish rival Nokia Oyj, the world's largest mobile-phone maker, reported sales that trailed analysts' estimates, sending its U.S. shares down 14 percent.
Stock futures rallied in pre-market trading after a Labor Department report showed the number of Americans filing claims for unemployment benefits fell last week to 522,000, the lowest level since January and lower than forecast. A separate report showed manufacturing in the Philadelphia region shrank at a faster pace than forecast.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net .
July 16 (Bloomberg) -- U.S. stocks rose for a fourth day, the longest streak in six weeks, as economist Nouriel Roubini said the worst of the financial crisis is over and reiterated that the recession may end this year, while takeover speculation lifted commodity shares.
Mosaic Co. rallied 12 percent, the most since December, on a report Vale SA may bid $25 billion for the fertilizer maker. United Parcel Service Inc. and General Electric Co. led industrial shares to the best gain among 10 groups as Roubini, the New York University professor who predicted the financial crisis, said a second government stimulus plan would help broaden the economic recovery.
The S&P 500 increased 0.9 percent to 940.74 at 4:05 p.m. in New York, capping its best four-day rally since March. The Dow Jones Industrial Average added 95.61 points, or 1.1 percent, to 8,711.82. European and Asian shares advanced.
"The optimism that people are starting to embrace is that the recession may be months away from ending," said David Goerz, who oversees $17 billion as chief investment officer at Highmark Capital Management in San Francisco. "Even the most bearish forecasters are starting to capitulate."
Financial shares led the market lower earlier on concern commercial lender CIT Group Inc. will have to file for bankruptcy protection and after JPMorgan Chase & Co. said its credit-card business probably won't make money next year. The S&P 500 reversed its loss as Roubini said the world's largest economy will recover from the recession by the end of 2009.
No Train, For Once
"The freefall of the economy has stopped," Roubini said at a Chilean investors' conference in New York. "There is light at the end of the tunnel. And the light at the end of the tunnel for once is not the one of an incoming train."
Roubini said July 9 that the recession would last another six months. He spoke at an event held at Bloomberg News's headquarters in New York. After the close of trading, Roubini said his comments today were a reiteration of his view that the contraction would last 24 months.
The gains added to yesterday's rally that sent the Dow up 3.1 percent, its steepest advance in three months, after Intel Corp. forecast sales that beat analysts' estimates and gauges of manufacturing improved. The S&P 500 has risen 7 percent so far this week as better-than-estimated retail sales boosted consumer shares and results at companies from Goldman Sachs Group Inc. to Johnson & Johnson beat analysts' estimates.
Beating Estimates
Earnings have topped estimates by an average of 24 percent for the 28 companies in the S&P 500 that released results since July 8. Analysts estimate profits fell an average 35 percent in the second quarter and will decrease 21 percent from July through September, according to data compiled by Bloomberg. The S&P 500, the benchmark index for U.S. equities, has rallied 39 percent from its 12-year low on March 9 amid speculation the economy is recovering.
Mosaic, which is majority owned by Cargill Inc., surged 12 percent to $49.98 as O Estadao de S. Paulo reported Vale SA, Brazil's largest mining company, is considering bidding for the North American fertilizer producer in a deal valued at $25 billion. BHP Billiton Ltd. also is interested in buying the company, the paper reported without saying where it got the information.
Freeport-McMoran Copper & Gold Inc. gained for the fourth straight day. The world's biggest publicly traded copper producer added 5.7 percent to $53.82.
Rally by Technology
Technology shares climbed as a group for a seventh straight day, the longest streak since September 2007. SanDisk Corp., the biggest maker of flash-memory cards used in digital cameras and mobile phones, added 9.1 percent to $17.67. The company will benefit from increasing demand for mobile Internet devices, said CNBC's "Mad Money" host Jim Cramer, who recommended the shares. Broadpoint AmTech also increased its share-point estimate on SanDisk to $21 from $19.
Shares of CIT, the 101-year-old commercial lender, tumbled 75 percent to 41 cents. The company said "there is no appreciable likelihood of additional government support being provided over the near term." The New York-based company, once the biggest independent commercial lender, may need as much as $6 billion to avoid seeking bankruptcy protection, CreditSights Inc. said.
JPMorgan Chase & Co. slipped 0.4 percent to $36.13. The second-largest U.S. bank probably won't make money from its credit card business next year, Chief Executive Officer Jamie Dimon said on a conference call. Credit card services account for about a quarter of the company's revenue, according to Bloomberg data.
Investment Banking
JPMorgan shares fell even after the bank reported better- than-expected second-quarter results. Profit climbed 36 percent, surpassing analysts' estimates, as investment-banking fees rose to a record.
Bank of America, which is set to report results tomorrow, slid the most on the Dow, losing 1.9 percent to $13.17. The biggest U.S. bank by assets said net charge-offs on its credit- card trust rose in June. Financial shares in the S&P 500 declined 0.2 percent collectively.
Motorola Inc. slumped 4.2 percent to $6.33. The biggest U.S. mobile-phone maker was downgraded to "neutral" from "buy" by Goldman Sachs Group Inc., which said the stock's price already reflected the prospect that the company's handset business may break even next year.
Finnish rival Nokia Oyj, the world's largest mobile-phone maker, reported sales that trailed analysts' estimates, sending its U.S. shares down 14 percent.
Stock futures rallied in pre-market trading after a Labor Department report showed the number of Americans filing claims for unemployment benefits fell last week to 522,000, the lowest level since January and lower than forecast. A separate report showed manufacturing in the Philadelphia region shrank at a faster pace than forecast.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net .
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