March 12 (Bloomberg) -- U.S. stocks advanced for the third straight day as General Electric Co. said the loss of the top credit rating at Standard & Poor’s will not hurt business and the government said retail sales beat estimates.
GE added 10 percent after losing the AAA grade that it held since 1956, while Bank of America Corp. and JPMorgan Chase & Co. gained 5.3 percent or more. Wal-Mart Stores Inc. rose 2.2 percent after government retail sales data indicated the biggest part of the economy is stabilizing. Pfizer Inc. rallied 5.1 percent following success in a drug trial.
The S&P 500 Index increased 1.2 percent to 730.19 at 11:24 a.m. in New York after losing as much as 0.9 percent. The Dow Jones Industrial Average climbed 72.08 points, or 1 percent, to 7,002.48. The Russell 2000 Index of small companies advanced 1.8 percent to 372.87. The MSCI World Index of 23 developed markets rose 0.1 percent to 731.68.
“With GE the fear was they’d lose their credit rating and they did, but S&P switched the outlook to stable so that’s seen as positive,” said Steve Sosnick, equity risk manager at Interactive Brokers Group Inc. in Greenwich, Connecticut.
U.S. stocks gained the past two days after JPMorgan and Citigroup Inc. said they were profitable in January and February, rebounding from the worst year for financial institutions since the Great Depression. The S&P 500 surged 6.4 percent on March 10 in the biggest rally since November.
No ‘Significant’ Harm
GE rose 10 percent to $9.36. While the shares have still plunged 42 percent in 2009, they have rebounded 33 percent this week. The company “does not anticipate any significant operational or funding impacts” from the credit downgrade, according to a statement. Its long-term debt rating was cut one level to AA+ with a “stable” outlook.
Bank of America rallied 6.1 percent to $5.23, and JPMorgan advanced 5.3 percent to $21.47. The S&P 500 Financial Index added 1.8 percent, giving it a four-day gain of 23 percent.
Futures on the S&P 500, which had declined 1.3 percent, rebounded after the Commerce Department said at 8:30 a.m. New York time that retail sales decreased 0.1 percent in February, less than the 0.5 percent slump economists forecast. January’s gain was almost double the previous estimate. Excluding automobiles, February sales unexpectedly climbed 0.7 percent.
“It’s good to see anything in the economic front that beat expectations,” said David Heupel, who helps manage $60 billion at Thrivent Financial for Lutherans in Minneapolis. “Any news that is not bad right now is good for the market.”
Best Buy, Gap
Wal-Mart, the world’s biggest merchant, added 2.2 percent to $48.49 following the government’s retail sales report. Best Buy Co., the nation’s biggest electronics retailer, rose 3.9 percent to $29.45. Clothing seller Gap Inc. climbed 2.5 percent to $11.16.
Pfizer Inc. led a gauge of 54 health-care companies in the S&P 500 to a 3.2 percent gain, the biggest advance among 10 industries. Its cancer drug Sutent showed “significant benefit” in patients with a form of pancreatic tumor, the company said.
Pfizer increased 5.1 percent to $13.44.
CV Therapeutics Inc. climbed 28 percent to $20.45 and earlier rallied to $20.68, the highest intraday price since April 2006. Gilead Sciences Inc. agreed to buy the company, which develops drugs for the treatment of cardiovascular diseases, for about $1.4 billion, or $20 a share.
Gilead fell 1.6 percent to $43.34.
“We’ve actually been putting a little bit of money into the stock market from the cash reserves we had,” said Dayle Malone, who helps manage $1 billion at Old Second Wealth Management in Aurora, Illinois. The rally in U.S. stocks is either driven by investors closing bearish bets or “people taking a longer-term perspective, saying that ‘I know things look bleak but the risk is worth the reward.’”
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