U.S. stocks rose, erasing the Dow Jones Industrial Average’s year-to-date loss, as investors speculated the world’s largest economy will keep expanding.
Ford Motor Co. (F), Caterpillar Inc. (CAT) and Alcoa Inc. gained at least 2.6 percent as companies most-tied to economic growth rallied. Joy Global Inc. (JOYG) jumped 4.8 percent after the maker of mining equipment forecast more earnings than analysts estimated. AT&T Inc. (T) fell 4.7 percent after the U.S. government sued to prevent its planned purchase of T-Mobile USA Inc., saying the deal would curb competition in the wireless market. Sprint Nextel Corp. (S), a rival carrier, rose 5.6 percent.
The Standard & Poor’s 500 Index climbed 0.8 percent to 1,222.18 at 11:47 a.m. in New York. It surged 9.5 percent through yesterday since Aug. 19, recouping 40 percent of its loss since July 22. The Dow added 64.03 points, or 0.6 percent, to 11,623.98 today. Stocks pared gains after Nouriel Roubini told Bloomberg Television the U.S. is entering a recession and the government attempted to block AT&T’s $39 billion deal.
“The stock market is poised for a rebound if data begins to be more encouraging,” Marshall Front, who helps oversee $600 million as chairman of Front Barnett Associates LLC in Chicago, said in an interview. “Stocks have gotten to a point where they are discounting a degree of slowness in the economy that is not likely to evolve.”
Stocks advanced after reports showed U.S. business activity and factory orders expanded at a faster pace than economists forecast. The S&P 500 pared its August decline to about 5 percent, still the biggest monthly retreat since June 2010. U.S. equities rose yesterday after the Federal Reserve said some policy makers wanted to take more action to stimulate the economy during their meeting this month.
Selling ‘Overdone’
“The economy is not falling off a cliff, and at the same time, policy makers are aware that growth is slow and they are prepared to do something to accelerate it,” Peter Jankovskis, who helps manage about $2.6 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “Much of the selling that we’ve experienced was overdone and left the market poised for a rally when sentiment began to change.”
The S&P 500 lost 16 percent between July 22 and Aug. 19 after the U.S. government lost its AAA rating at S&P and investors speculated the European debt crisis was intensifying. Equities gained 8.4 percent between Aug. 8 and yesterday after the S&P 500 traded at 12.2 times earnings, the lowest level since 2009, according to data compiled by Bloomberg.
Benchmark gauges pared earlier gains after Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC, said the economy has 60 percent chance of falling into a recession next year.
‘Fizzle Out’
“We’re not going to have a fiscal stimulus,” Roubini told Bloomberg Television. “We’re going to have a fiscal drag and therefore the short-term effect of a rally in the market is going to fizzle out when the real economy is going to go and tank. We’re entering a recession based on my numbers.”
The Morgan Stanley Cyclical Index of companies whose earnings are most-dependent on economic growth rallied 1.6 percent. Ford gained 3 percent to $11.20, while Caterpillar added 2.6 percent to $92.20. Alcoa rose the most in the Dow, gaining 3.8 percent to $12.83.
Joy Global advanced 4.8 percent to $86.32. The maker of P&H and Joy mining equipment lifted its earnings forecast in 2011 to as much as $6 a share, exceeding the average analyst estimate of $5.72, according to data compiled by Bloomberg.
Only Decline
Phone companies had the only decline in the S&P 500 within 10 industries, falling 2.3 percent as a group. AT&T slumped 4.7 percent to $28.24. The U.S. government said its purchase of T- Mobile would “substantially lessen competition” in the wireless industry.
The purchase would combine the second- and fourth-largest mobile-phone carriers in the country, surpassing No. 1 Verizon Wireless. Verizon Communications Inc. (VZ), which co-owns the biggest operator with Vodafone Group Plc, slipped 1.3 percent to $35.84. Sprint advanced 5.9 percent to $3.76.
Lions Gate Entertainment Corp. (LGF) sank 6.1 percent to $7.06. Billionaire Carl Icahn agreed to sell his Lions Gate shares for $7 each, roughly his cost, to end a battle for control over the independent film and television studio. The parties also agreed to end all litigation, according to a statement issued yesterday by Icahn and Lions Gate, the studio behind the “Saw” movies and “Mad Men” TV show.
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