IBJNews

S&P completes biggest first-quarter rally since 1998

Back to TopCommentsE-mailPrintBookmark and Share

U.S. stocks rose this week, with the Standard & Poor’s 500 Index completing the biggest first-quarter rally since 1998, after Federal Reserve Chairman Ben S. Bernanke said he will keep stimulating the economy and Europe agreed to increase rescue funds.

Indianapolis-based WellPoint Inc. surged 11 percent, leading health-care stocks to the biggest rally among 10 S&P 500 groups, amid speculation the U.S. Supreme Court won’t eliminate the insurance mandate while leaving intact other costly provisions in an industry overhaul. Pfizer Inc. climbed 3.8 percent after a Goldman Sachs Group Inc. analyst said the drugmaker may split itself up. Red Hat Inc. jumped 15 percent after the software maker forecast earnings that beat analysts’ estimates.

The S&P 500 rose 0.8 percent to 1,408.47 and closed at the highest level since May 2008 on March 26. It advanced 12 percent during the first quarter, including a 3.1 percent increase in March. The Dow Jones Industrial Average added 131.31 points, or 1 percent, to 13,212.04 this week. The Nasdaq Composite Index climbed 0.8 percent and surged 19 percent during the quarter, the most to start a year since 1991.

“The market can continue to rally into May and the early part of June,” Jon Fisher, a fund manager at Fifth Third Asset Management in Minneapolis, which oversees about $16 billion of assets, said in a telephone interview. “You have all that monetary policy unleashed in the market globally. At the same time, you got a huge improvement in sentiment. Outlooks for the rest of the year are going to continue to be positive.”

Equities advanced, with the S&P 500 rebounding from 2012’s biggest weekly decline between March 16 and March 23, after Bernanke said accommodative monetary policy is still needed to spur jobs. European finance ministers boosted rescue funding by 500 billion euros ($666 billion), bringing the size of the firewall to 800 billion euros in the latest move to tame the region’s debt crisis. Reports on U.S. personal spending and consumer confidence topped economists’ projections.

More than $3.6 trillion has been restored to U.S. equity values since October amid better-than-estimated earnings and economic data. The index has climbed 28 percent since Oct. 3, sending the S&P 500 to 14.6 times reported earnings, close to the highest valuation since July while below the average since 1954 of 16.4.

“We’re getting closer to fair value,” Ralph Shive, the South Bend-based manager of the $1.65 billion Wasatch-Large Cap Value Fund, said in a telephone interview. “There is most likely a correction this year for sure, with the uncertainties around the world.”

The S&P 500 Health Care Index rallied 2.7 percent this week to the highest level since December 2000. The Supreme Court ended its hearings of the health-care law March 28. The justices probably will rule in late June on how much of the law must be thrown out if they decide Congress can’t require Americans to buy medical insurance.

“We believe that the worst case scenario for managed care [solely individual mandate struck] is off the table,” Christine Arnold, an analyst with Cowen & Co., wrote in a March 30 note. “Given a heightened probability that the individual mandate and related commercial regulations will be struck, we view commercial managed care stocks as likely relative winners under the most probable Supreme Court outcome scenarios.”

WellPoint, the largest U.S. health insurer by enrollment, surged 11 percent, the most since May 2009, to $73.80. Aetna Inc. climbed 10 percent to $50.16 while Coventry Health Care Inc. advanced 10 percent to $35.57.

Pfizer had the biggest rally in the Dow, increasing 3.8 percent to $22.65. Jami Rubin, a Goldman Sachs analyst, said the company may further split itself up after selling or spinning off its animal health and nutrition businesses.

Red Hat surged 15 percent, the most in the S&P 500, to $59.89. Chief Executive Officer Jim Whitehurst said the company was surprised by demand for its Red Hat Enterprise Linux software from corporations preparing to move more applications to the so-called cloud, where they can be delivered to users over the Internet.

Profit for the current fiscal year will be at least $1.16 a share, the company projected. Analysts, on average, estimated $1.15, according to a Bloomberg survey.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
thisissue1-092914.jpg 092914

Subscribe to IBJ
  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

ADVERTISEMENT