S&P 500 rallies on retail data and Belo Corp buyout
The S&P 500 rallied today on the back of better than expected US retail sales data and the news that Gannett Co. had come to an agreement to purchase Belo Corp for a figure believed to be in the region of $1.5bn.
The US commerce department announced that retail sales in May had grown by 0.6 percent, after a small advance of 0.1 percent in April. Analysts had originally expected the data would show a gain of around 0.4 percent but the data beat those expectations by a clear 50 percent. Additionally, it was also announced that new unemployment claims were down for last week, which investors appeared to interpret as a positive — despite the threat of the Federal Reserve pulling the plug on its $85bn a month bond-buying program.
Prior to today’s trading the S&P 500 found itself 3.5 percent off its May 21st price with the declines being almost entirely being attributed to Ben Bernanke’s suggestion that the Fed may begin tapering its stimulus package if the US economy shows solid signs of growth. This has led to investors driving stock prices down upon the release of any and all positive data. However, today the data appeared to be too good to resist as investors went hunting for profits after an extremely slow start to the month.
Chris Bertelsen, the Chief Investment Officer of Global Finance Private Capital, told Bloomberg “The only issue for the market is we’re in a vacuum month. In other words, there are no earnings, there is nothing to latch onto other than an occasional number here and there and people are worried about the Fed tapering”.
Gannett Co. led the S&P 500 in gains on a percentage basis with an advance of 6.75 points, or 34.01 percent, as the publishers of USA Today saw their $1.5bn offer for Belo Corp get accepted. PVH Corp, the manufacturers behind Calvin Klein, saw their stock rise by 11.32 points, or 10.17 percent, as their quarterly results blew analysts predictions out of the water. The company had originally suggested earnings would come in at around the $1.33 per share, with analysts predicting $1.35 per share. The report they filed showed earnings to actually be $1.91 per share, beating expectations by more than 41 percent. The other big news to come out of the S&P 500 today was the $5.7bn buyout of Safeway Canada by Sobeys. Safeway stocks rose by 7.4 percent to 24.82.
At the bell in New York the S&P had added 1.5 percent, closing at 1,636.40 after declining by almost 2 percent during the first half of the week.