NEW YORK: Stocks advanced Friday as the Standard & Poor’s 500 index rallied for a third straight week, amid optimism that the U.S. economy is improving.
Gap Inc. added 5.6 percent, pacing gains with discretionary stocks after forecasting profit that topped estimates. Nvidia Corp. rose 4.5 percent as fiscal first-quarter sales and earnings exceeded projections. Priceline.com Inc. increased 3.8 percent to its highest in 14 years after reporting better-than-forecast results. Apple Inc., the world’s most valuable company, lost 0.8 percent.
The S&P 500 increased 0.4 percent to a record 1,633.70. The index rallied 1.2 percent this week. The Dow Jones industrial average added 35.87 points, or 0.2 percent, to 15,118.49, an all-time high.
“The party continues,” Rex Macey, who oversees $20 billion as chief investment officer at Wilmington Trust Investment Advisors in Atlanta, said by telephone. “Bad news is out there, which continues to be what’s going on in Europe. Japan is better. The U.S. seems to be doing fine. Earnings are supportive of the equity market. We’ve got the Fed and central banks that are supportive. We’re in this low interest rate, low inflation environment, and that’s pretty good for equities.”
The U.S. bull market has entered its fifth year. The S&P 500 has surged 141 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Fed.
The central bank said May 1 it will maintain its bond buying at a pace of $85 billion a month and is prepared to raise or lower the level of purchases as economic conditions evolve. It also plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent.
Group of Seven finance ministers started a two-day meeting in Aylesbury, north of London, on Friday. Central banks worldwide have announced 511 interest-rate cuts since June 2007, according to a Bank of America Corp. tally done before Vietnam and Sri Lanka lowered their policy rates.
Consumer discretionary stocks rallied, gaining 0.8 percent. Gap added 5.6 percent to $40.99. The largest U.S. apparel chain forecast first-quarter profit that topped analysts’ estimates. Earnings will be as much as 69 cents a share, exceeding the 56-cent profit projected by analysts on average.
Priceline.com Inc. increased 3.8 percent to $765.41, the highest since May 1999. The largest U.S. online-travel agent by market value reported first-quarter profit and sales that exceeded analysts’ estimates as travelers used the site to book hotel rooms.
Nvidia climbed 4.5 percent to $14.54 after the maker of graphics processors said net income rose to $77.9 million, or 13 cents a share, in the quarter ended April 28. Sales increased 3.2 percent to $954.7 million. Analysts on average had forecast earnings of 10 cents on sales of $940.7 million.
About 72 percent of S&P 500 companies that have reported quarterly results since the start of the earnings season have exceeded analysts’ profit estimates, while 52 percent missed sales projections, according to data compiled by Bloomberg.
Warner Chilcott Plc soared 20 percent to $18.01 after Actavis Inc. said it’s in early-stage talks to buy the drugmaker. Actavis, the largest U.S. maker of generic drugs by market value, jumped 12 percent, the most in the S&P 500, to $119.86.
The discussions come just a few weeks after Actavis weighed a merger with fellow generics maker Valeant Pharmaceuticals International Inc., said people familiar with the process, who asked not to be named because the negotiations are private.
The price of oil slid 0.4 percent to $96.04 a barrel, as the dollar climbed, reducing the appeal of raw materials priced in the U.S. currency.
Exxon Mobil Corp. dropped 1 percent to $90.14, while Chevron Corp. erased 0.3 percent to $123.23.
Apple sank 0.8 percent to $452.97, after earlier rising as much as 0.6 percent. While the iPhone maker has jumped 16 percent since hitting a 16-month low on April 19, shares failed to stay above their 100-day moving average of $460.43, according to Bloomberg data. Apple closed above the 100-day moving average on May 8 for the first time since October 2012, the data show.