By Alexandra Scaggs
U.S. stocks rallied on Thursday, as oil prices rebounded and Dow
component Pfizer Inc. announced a $16 billion deal.
The Dow Jones Industrial Average rose 147 points, or 0.8%, to
17820. The S&P 500 gained 16 points, or 0.8%, to 2057 and
Nasdaq Composite Index added 31 points, or 0.7%, to 4747.
Rising crude-oil prices fueled gains in materials and energy
stocks, which led the S&P 500 higher with gains of 2% and 1.5%,
respectively. U.S. crude-oil futures rose 5.7% to $51.21 a barrel.
A monthslong decline in the price of oil and other commodities has
caused some investors to fret about global demand.
"They have some sort of price stability... [which shows] global
fears of a slowdown are somewhat overblown," said Jeff Yu, head of
single-stock derivatives trading at UBS AG. The buying came from a
"very broad" range of investors, he added.
Health-care stocks rallied 1.2% after Pfizer agreed to buy
Hospira Inc., which makes injectable drugs and infusion
technologies. Hospira shareholders will receive $90 a share in
cash, representing a premium of 39% to Wednesday's closing price.
Shares of Pfizer rose 2.2% and those of Hospira surged 35%.
The bullish mood was also supported by better fourth-quarter
corporate earnings. With 309 companies in the S&P 500 having
now reported, earnings were recently on pace to grow 3.5% from last
year, above initial forecasts for 1.1% of growth. Results have
improved in recent days, bolstered by a blowout report from Apple
Inc. And even without Apple, earnings are now on track to grow 1.7%
from last year, an improvement from last week, when profits were on
pace to shrink 0.5% excluding the tech giant.
Earnings season "started atrociously... but overall, earnings
are pretty good," said Dan Greenhaus, chief global strategist at
New York brokerage firm BTIG.
Thursday's stock gains follow a string of swings earlier this
month. Stock-market volatility has picked up this year, driven in
part by sharp moves in energy and currency markets. Driving the
swings has been uncertainty about the impact of an interest-rate
increase from the Federal Reserve, concerns about Greece and
worries about global growth.
But U.S. shares shrugged off rising tensions in negotiations
between Greece and its creditors on Thursday, though benchmarks
took a hit from the news during Wednesday's session. That day, the
Dow gave up a gain of 116 points to end little changed after the
European Central Bank said it would stop accepting Greek bonds as
collateral for regular central bank loans. Greece's new leaders are
seeking to ease conditions on its bailout program.
The ECB's announcement, which was released after the close of
European markets, weighed on Greek stocks and bonds Thursday.
Germany's DAX slipped nearly 0.1%, while Greece's Athex Composite
fell 3.4%.
Federal Reserve Bank of Boston President Eric Rosengren
suggested Thursday that the dollar's rally has complicated the
Fed's efforts to get annual consumer-price growth back to
target.
Stocks extended gains in early trading after
better-than-expected data on the labor market. Jobless claims in
the week ended Jan. 31 rose by 11,000 to 278,000, the Labor
Department said Thursday. Economists polled by The Wall Street
Journal had expected 290,000 new claims.
On Friday, the closely watched nonfarm payrolls report is
expected to show the economy added 237,000 jobs in January, as the
unemployment rate ticked down to 5.5% from 5.6%.
In Asia, China's Shanghai Composite Index fell 1.2% and Japan's
Nikkei Stock Average declined 1%, despite introduction of a new
stimulus measure from the People's Bank of China.
Gold futures fell 0.2% to $1262.30 an ounce. Treasury prices
fell, pushing the yield on the 10-year Treasury note up to 1.806%
from 1.794% Wednesday.
Verizon Communications Inc. is close to selling a package of
wireline assets to Frontier Communications Corp. for around $10
billion, The Wall Street Journal reported. Shares of Verizon
slipped 0.4%, while those of Frontier jumped 6%.
Anthem Inc., the second-biggest health insurer in the U.S., said
hackers broke into a database containing personal information for
about 80 million customers and employees. Shares of the company
fell 0.6%.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com
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