Stocks: Thursday's review
Japanese stocks rose for a second day as some companies reported improved earnings and on optimism signs of a strengthening recovery in the U.S. will boost exporters.
Toyota Motor Corp., the world’s No. 1 carmaker, gained 0.6 percent after a U.S. report showed companies added more workers this month. Advantest Corp., the world’s biggest maker of machines used to test memory chips, climbed 3.8 percent. Dainippon Sumitomo Pharma Co., a drugmaker, jumped 6.2 percent after boosting its profit outlook.
European stocks fell as inflation unexpectedly accelerated to the fastest pace in more than two years in March and investors speculated that the region will struggle to contain its sovereign-debt crisis.
Inflation in the 17-nation euro area quickened to 2.6 percent in March from 2.4 percent in February, the European Union’s statistics office in Luxembourg said today in an initial estimate. That’s the fastest pace since October 2008 and exceeds the ECB’s 2 percent limit for a fourth month.
Banks extended losses in the final minutes of trading as Irish regulators instructed the country’s four largest lenders to raise 24 billion euros ($34 billion) in capital following a series of stress tests. Hennes & Mauritz AB (HMB) slumped 3.2 percent after saying first-quarter profit fell.
Moody’s Investors Service said it can’t rule out further credit downgrades for euro-area nations because the EU’s March 25 agreement on a permanent bailout fund, the European Stability Mechanism, failed to go far enough.
U.S. stocks swung between gains and losses at the end of the biggest first-quarter rally in 13 years as higher oil and metal prices drove commodity producers up, while consumer companies and banks slumped.
Rowan Cos. added 4.1 percent after Moody’s Investors Service upgraded the driller’s outlook. Berkshire Hathaway Inc. (BRK/A) lost 2.1 percent as David Sokol, once a candidate to succeed Warren Buffett as the head of the investment firm, resigned after helping to negotiate the acquisition of a company whose shares he had purchased. Carmax Inc. (KMX) slumped 7.1 percent after the largest U.S. seller of used cars said gross margin dropped.
The S&P 500 advanced 5.6 percent in this quarter through yesterday and is poised for its biggest gain in the January- March period since 1998. An earthquake and tsunami in Japan and concern that revolts in the Middle East and northern Africa will curb global growth dragged the S&P 500 as much as 6.4 percent lower from its high for the year on Feb. 18 through March 16. The gauge has recovered most of that loss, trimming its drop from its 2011 high through yesterday to 1.1 percent.
The S&P 500 usually climbs further following first-quarter gains similar to this year’s, according to Birinyi Associates Inc. The index rises about 7.1 percent in the final three quarters of years following January-March gains of 5 percent to 7 percent, Birinyi data dating back to 1928 show.
The benchmark gauge of U.S. stocks is trading for about 13.7 times its companies’ estimated operating earnings, compared with an average multiple of 18.1 times reported profits over the last decade, data compiled by Bloomberg show.