By Alexandra Scaggs
U.S. stocks rallied Thursday, as a rebound in oil prices and
upbeat company news helped push benchmarks back into positive
territory for the year.
The Dow Jones Industrial Average rose 211.86 points, or 1.2%, to
17884.88, now up 0.3% for 2015. It closed with a yearly gain for
the first time since Jan. 8.
The S&P 500 gained 21.01 points, or 1%, to 2062.52, giving
it a 0.2% yearly gain. The Nasdaq Composite Index added 48.39
points, or 1%, to 4765.10.
Rising crude-oil prices fueled gains in materials and energy
stocks. A monthslong commodity-price decline has recently fueled
worries about global economic growth. And while oil prices remain
volatile, a 14% rebound from their recent lows has assuaged some of
those fears, strategists say.
On Thursday, U.S. crude-oil futures rose 4.2% to settle at
$50.48 a barrel. Materials shares led the S&P 500 higher, with
a gain of 2.4%. Energy stocks outperformed the broader index,
rising 1.4%.
Commodities "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. A "very broad"
range of investors were buying stocks Thursday, he added.
Health-care stocks in the S&P 500 rallied 1.6% 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 2.9% and Hospira surged 35%.
"Today re-emphasizes the growing confidence that companies have"
to carry out deals, said Sean Lynch, co-head of global equity
strategy at Wells Fargo Investment Institute. "You're seeing
companies do some things to reward equity shareholders... the
corporate sector is in a good position here." Because of that, the
bank is bullish on large-cap U.S. stocks, he said.
E.I. DuPont de Nemours and Co. was the best performer in the
Dow, rallying 3.1% after it named two new directors to its board in
a revamp. It excluded candidates nominated by activist investor
Nelson Peltz's Trian Fund Management Corp.
The bullish mood was also supported by improving 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, according to FactSet, 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. Just last week, 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 expected
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 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.
Investors also considered 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 slipped 0.1% to settle at $1272.00 an ounce.
Treasury prices fell, pushing the yield on the 10-year Treasury
note up to 1.815% from 1.794% Wednesday.
Verizon Communications Inc. confirmed plans to sell a package of
wireline assets to Frontier Communications Corp. for around $10
billion. Shares of Verizon rose 0.1%, while those of Frontier
jumped 5.8%.
Anthem Inc., the second-biggest health insurer in the U.S., fell
0.3% after it said hackers broke into a database containing
personal information for about 80 million customers and
employees.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com
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