Stocks & Equities

(Reuters) – Stocks rose on Friday, with the S&P 500 closing above 1,800 for the first time and healthcare names leading the way higher.

The Dow industrials ended at another record high above 16,000.

Both the Dow and the S&P 500 recorded their seventh straight week of gains in what has been a very strong year for stocks. The seven-week advance comes just ahead of December, which since 1950 has been the best month for both the Dow and the S&P.

“We’re advising our clients to take this ride until the end of the year,” said Drew Nordlicht, managing director and partner at Hightower San Diego.

The Nasdaq Biotech Index .NBI jumped 3 percent, driven by a surge in Biogen Idec (BIIB.O).

Shares of Biogen shot up 13.2 percent on heavy volume to $285.62 after the company won 10 years of exclusivity protection for its multiple sclerosis drug, Tecfidera, from regulators in Europe.

“Healthcare is the place to be. It’s a hot area. People want stocks in healthcare, industrials and consumer discretionary. That’s where tactical investors have been focused, and that’s where the money has been flowing,” said Michael Matousek, head trader at U.S. Global Investors Inc, in San Antonio, Texas.

European regulators also recommended approval of a new drug for hepatitis C from Gilead Sciences (GILD.O), which pushed its shares up 3.7 percent to $74.27.

The S&P 500 healthcare sector index .SPXHC has gained 37.5 percent so far in 2013, making it the S&P 500’s best-performing sector this year.

Such moves give investors who have enjoyed some of the 26.5 percent surge in the S&P 500 this year an opportunity to reduce their positions ahead of an eventual market correction.

The CBOE Volatility Index .VIX fell 3.2 percent to close at 12.86.

With volatility low and the price of options cheap, “you can lighten your stock position, but replace it with a derivative. This way, if the market were to tank, you would lose a lot less on the derivative than you would lose on the stock,” Matousek said.

The Dow Jones industrial average .DJI rose 54.78 points, or 0.34 percent, to end at a record 16,064.77. The Standard & Poor’s 500 Index .SPX gained 8.91 points, or 0.50 percent, to finish at 1,804.76. The Nasdaq Composite Index .IXIC climbed 22.50 points, or 0.57 percent, to close at 3,991.65.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said on CNBC that reducing the pace of the central bank’s bond-buying program will be on the table at its December policy meeting. He added that monetary policy is likely to be very accommodative for some time.

“In the meantime, $85 billion a month keeps swirling into investor hands, and some of that finds its way out into the financial markets, including the stock market,” said Fred Dickson, chief market strategist at D.A. Davidson & Co., in Lake Oswego, Oregon.

Intel (INTC.O) fell 5.4 percent to $23.87 and was the biggest drag on the S&P 500 after analysts questioned whether the chipmaker can get higher-margin chips into tablets and smartphones, which are eroding sales of traditional PCs.

 

 

Where Marc Faber sees Opportunities

id32CR3Rm56MEuropean equities are poised to outperform the U.S. market, Marc Faber of the Bloom Gloom & Doom Report says.

 

“At the present time, I think that Europe has had a very good move from the lows. It outperformed the U.S., and I would be a little bit careful to buy stocks indiscriminately at the present time because everything has moved up significantly. There’s a lot of bullish sentiment,” he said. “But in general, I like selected European companies because their business is international and their exposure to Europe is not all that large. Maybe 40 to 50 percent of their total sales are in Europe, and the rest is overseas. 

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Stocks inched higher at the open on Friday after theDow industrials closed above 16,000 for the first time, amid a dearth of data and ahead of a holiday-shortened week in the United States.

The Dow Jones industrial average .DJI fell 4.11 points or 0.03 percent, to 16,005.88, the S&P 500 .SPX gained 1.48 points or 0.08 percent, to 1,797.33 and the Nasdaq Composite .IXIC added 9.915 points or 0.25 percent, to 3,979.07.

From Bloomberg:

Time Warner Cable Inc. surged 7.7 percent on renewed takeover speculation. United Continental Holdings Inc. (UAL) climbed 2.4 percent after billionaire David Tepper said that his “big play in the market” is airlines. Foot Locker Inc. rallied 3.6 percent after it posted higher-than-estimated quarterly earnings. Ross Stores Inc. (ROST) plunged 7.5 percent after cutting its earnings forecast.

The Standard & Poor’s 500 Index rose 0.1 percent to 1,798.14 at 10:18 a.m. in New York. The U.S. equity benchmark is poised to end the week little changed, halting a six-week streak of gains. The Dow average fell 11.78 points, or less than 0.1 percent, to 16,021.77.

“I don’t see any reason why the market shouldn’t go up,” Karyn Cavanaugh, a vice president and market strategist at ING U.S. Investment Management in New York, said in a phone interview. Her firm oversees $196 billion. “There’s not really any bad news. We have a little bit of a pullback and then people jump in and say, ’Hey, I want a piece of this.’”

The S&P 500 rallied yesterday after three days of losses as data showed weekly jobless claimsfell to the lowest level since September and a confidence survey indicated American consumers became less pessimistic this month. The Dow average has climbed 0.3 percent this week, headed for its seventh straight weekly gain, the longest streak since January 2011.

Not Inflated

Economic stimulus from the Fed has helped the S&P 500 soar 166 percent since its March 2009 low. The index rallied 26 percent this year, poised for its best annual performance in a decade. The gauge traded for about 17 times its companies’ reported earnings at its last record on Nov. 15, the highest valuation since May 2010.

Tepper, the hedge-fund manager who runs Appaloosa Management LP, said stock markets are not inflated as economies in the U.S., Europe and China are on “firm ground.” He said that while he remains bullish on U.S. stocks, markets may fall 5 percent to 10 percent when the Fed curbs its monthly stimulus program. He said his firm recently bet against U.S. Treasuries as a hedge.

“I know there’s talk about bubbles, this is not one,” Tepper said in an interview with Bloomberg Television’s Stephanie Ruhle at the Robin Hood Investors Conference in New York yesterday.

United Continental

United Continental rose 2.4 percent to $38. Goldman Sachs Group Inc. also lifted its rating on the world’s biggest airline to buy from neutral.

Foot Locker rallied 3.6 percent to $38.10. The largest U.S. athletic shoe retailer posted third-quarter earnings of 68 cents a share, exceeding the average analyst estimate by 2 cents.

Time Warner Cable, the second-largest U.S. cable company, jumped 7.7 percent to $130.18. Charter Communications Inc., backed by billionaire John Malone, is in talks with banks about financing an attempt to buy Time Warner Cable, the Wall Street Journal said yesterday. CNBC reported today that Comcast Corp. investors are pushing for the company to make its own bid for Time Warner Cable.

Ross Stores tumbled 7.5 percent to $74.25. The retailer of discount designer wear lowered its forecast for fourth-quarter earnings to no more than $1.01 a share, after previously predicting as much as $1.03. That fell short of the average analyst estimate of $1.08.

Intel Corp. (INTC) lost 2.7 percent to $24.54. The world’s largest maker of semiconductors saidrevenue will be approximately unchanged in 2014. The company predicts the personal-computer market, measured by units, to be down in the ‘low single-digit’ percent, Chief Financial Officer Stacy Smith said.

Abercrombie & Fitch Co. slid 3.8 percent to $33.63. The retailer was cut to market perform from outperform at Wells Fargo Securities.

To contact the reporters on this story: Inyoung Hwang in London at ihwang7@bloomberg.net; Nick Taborek in New York at ntaborek@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

Chinese shares listed in Hong Kong outperformed markets in the mainland and most of Asia ex-Japan on Friday, as strength in growth-sensitive stockshelped the H-share index have its biggest weekly gain in nearly two years.

The China Enterprises Index of the top Chinese listings finished up 1 percent on the day and up 7 percent on the week, its biggest weekly rise since early December 2011. H-shares are now trading at their biggest premium over A-shares in three years.

The Hang Seng Index was up 0.5 percent at 23,696.3 points and up 2.9 percent for the week, but was just shy of the year’s intra-day high at 23,944.7.

Shares of Fosun Pharmaceutical and its parent Fosun International tumbled on speculation the chairman of the parent company was under investigation, but their falls for the day were pared after Fosun International said the rumor was baseless.

Investors are pouring more money into U.S. stock mutual funds than they have in 13 years, enticed by a market nearing record highs and stung by bond losses that would deepen if interest rates rise further. Stock funds gained $172 billion in the year’s first 10 months, the largest amount since they netted $272 billion in all of 2000, according to Morningstar Inc. (MORN) estimates. With most of the cash going to international funds, domestic equity deposits are the highest since 2004. The move marks a reversal from the four years through 2012, when investors put $1 trillion into fixed income as the financial crisis drove many to redeem shares and miss out on profits as Standard & Poor’s 500 Index almost tripled from its low. Rare losses this year in core bond portfolios, coupled with a 25 percent gain in the S&P 500, spurred a switch back to equities that some professionals call risky performance chasing. “The timing of retail investors tends to be terrible,” said Jonathan Pond, an independent financial adviser in Newton, Mass. New fund deposits may be a contrarian indicator to show when a market is nearing a top, he said.

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