Wall St ends higher on late rally in technology shares
(Bloomberg) -- An end-of-day rally in semiconductor stocks spurred by takeover speculation helped send the Nasdaq Composite Index to its first gain of the week, cushioning stocks from comments made by Federal Reserve Chair Janet Yellen.
Altera Corp. surged 28 percent after the Wall Street Journal said Intel Corp. was in talks to acquire it. The Philadelphia Stock Exchange Semiconductor Index rose 2.8 percent. Alexion Pharmaceuticals Inc. jumped 2.6 percent to lead biotech companies. Energy companies fell as oil prices retreated for the first time in six sessions.
The Nasdaq Composite Index increased 0.6 percent, paring its decline for the week to 2.7 percent. The Standard & Poor's 500 Index gained 0.2 percent to 2,061.02 at 4 p.m. in New York after fluctuating most of the session. The Dow Jones Industrial Average advanced 34.43 points, or less than 0.2 percent, to 17,712.66. About 5.8 billion shares changed hands on U.S. exchanges Friday, 15 percent below the three-month average.
The Nasdaq Composite Index increased 0.6 per cent, paring its decline for the week to 2.7 per cent. AFP
"The Intel news sparked the imagination of some and created a little bit of a short-covering and the stock market pulled into positive territory," Yousef Abbasi, the global market strategist at JonesTrading Institutional Services LLC in New York, said by phone. "Yellen continues to be incredibly elusive, but delivering the right message for the markets."
Equities rallied in the final 30 minutes on the Intel news. The company is in talks to acquire Altera, people with knowledge of the matter said, in what could be the chipmaker's largest- ever purchase.
Chipmaker Deals
Semiconductor makers are turning to acquisitions as they seek new avenues of growth. Dutch chipmaker NXP Semiconductor agreed earlier this month to acquire Freescale Semiconductor Ltd. for about $11.8 billion.
Altera's rally helped pare losses in the worst week for chip stocks since October 2014. Other companies posting gains of more than 5 percent were Skyworks Solutions Inc., Xilinx Inc. and Intel.
Equities maintained their gains amid comments from Yellen, which came 15 minutes before the market closed. Yellen said she expects the Fed to raise interest rates this year, and that subsequent increases will be gradual without following a predictable path.
"With Yellen, it was nothing that people didn't know but it maybe provided some assurance that it's going to be a slow rate increase," Donald Selkin, who helps manage about $3 billion as chief market strategist at National Securities Corp. in New York, said by phone. "I don't think she broke any new ground."
Data Watch
Fed policymakers have been gauging the strength of the U.S. economy as they consider the timing for the first interest-rate increase since 2006.
Data today showed gross domestic product expanded at a 2.2 percent annualized pace in the fourth quarter, led by the biggest gain in consumer spending in eight years.
The revised GDP, the value of all goods and services produced, matched the Commerce Department's previous estimate. The report also showed corporate profits dropped in the last three months of the year, capping the worst annual performance since the recession.
Alcoa Inc. unofficially kicks off the earnings season when it reports first-quarter results on April 8. Companies in the S&P 500 will see a contraction of 5.6 percent for the first three-months, analyst estimates show.
Consumer confidence fell less than forecast in March, capping the best quarter since 2004 as the labor market stayed strong and gasoline prices leveled off. The University of Michigan said Friday that its final index of sentiment cooled to 93 this month from 95.4 in February.
VIX Slips
The S&P 500 fell 2.2 percent this week, paring its gain for the quarter to 0.1 percent. The gauge came within 0.5 percent of its all-time high on March 20. The measure hasn't increased for two straight days since Feb. 17, the longest stretch since 1994.
The Chicago Board Options Exchange Volatility Index fell 4.6 percent to 15.07. The gauge, known as the VIX, still had its biggest weekly gain since January, up 16 percent.
Six of the S&P 500's 10 main groups rose Friday. Health- care shares advanced the most, up 0.7 percent. The Nasdaq Biotechnology Index climbed 1.9 percent after retreating 7 percent over four consecutive days.
Anthem Inc. added 2.3 percent after Leerink Partners LLC analyst Ana Gupte said the health-insurance company is seeking a deal to bolster its Medicare Advantage business. Cigna Corp. and Aetna Corp. rose more than 1.4 percent. UnitedHealth Group Inc. was among the Dow's best gainers, up 1.5 percent.
Retailers Rally
Retail companies climbed after the fourth-quarter GDP report showed strengthening consumer spending, and a separate report revealed consumer sentiment in this year's first quarter was the strongest since 2004. Target Corp., Home Depot Inc. and Bed Bath & Beyond Inc. rose more than 1.3 percent.
Energy shares led declines in the benchmark gauge as oil lost more than 5 percent. Transocean Ltd. and Valero Energy Corp. dropped at least 2.4 percent.
GameStop Corp. slipped 1.1 percent, paring an earlier decline of more than 4 percent, after posting fourth-quarter sales and earnings that missed analysts' estimates. The video- game retailer's forecast for profit in the current year also fell below expectations.
Yahoo! Inc. rose 1.4 percent after the largest U.S. Web portal added $2 billion to its stock-repurchase program.
BlackBerry Ltd. climbed 1.7 percent. It reported a surprise fourth-quarter profit after increasing the average price of its smartphones amid slumping sales.
--With assistance from Sofia Horta e Costa in London.
To contact the reporters on this story: Oliver Renick in New York at orenick2@bloomberg.net; Michelle F. Davis in New York at mdavis194@bloomberg.net To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net John Shipman, Namitha Jagadeesh
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