U.S. stocks advanced in early trading today, after the Standard & Poor’s 500 Index posted its biggest weekly loss in three months, on an increase in takeover activity and better- than-forecast earnings from Citigroup Inc.
Citigroup climbed 3.5 percent after also agreeing to pay $7 billion to settle a mortgage-bond probe. URS Corp. jumped 7.8 percent after Aecom Technology Corp. agreed to acquire the construction-management company for about $4 billion. AbbVie Inc. fell 0.8 percent after Shire Plc said it’s willing to recommend the U.S. company’s latest bid to its shareholders.
The S&P 500 added 0.6 percent to 1,978.38 at 9:51 a.m. in New York. The Dow Jones industrial average climbed 132.63 points, or 0.8 percent, to 17,076.44. The Russell 2000 Index jumped 0.8 percent after its worst weekly decline in more than two years. Trading in S&P 500 companies was 8 percent above the 30-day average for this time of day.
“Earnings generally are coming in pretty positively here and revenues are as well,” said Timothy Ghriskey, chief investment officer at New York-based Solaris Asset Management LLC, in a phone interview. “It’s a very early stage in this earning’s season to declare victory, but the indications look good here. Citi’s numbers are very strong.”
The S&P 500 slid 0.9 percent last week amid signs of financial stress at a Portuguese bank and speculation that the recent rally is overdone. The benchmark gauge closed at an all- time high and the Dow topped 17,000 for the first time on July 3. The S&P 500 hasn’t had a drop of 10 percent in more than two years and the gauge trades at a valuation of 18 times reported earnings, the highest since 2010.
Citigroup jumped 3.5 percent to $48.64. The third-largest U.S. bank by assets agreed to pay $7 billion in fines and consumer relief to resolve government claims that it misled investors about the quality of mortgage-backed bonds sold before the 2008 financial crisis.
The bank said second-quarter profit tumbled 96 percent on $3.7 billion in costs tied to the settlement. Excluding items, profit was $1.24 a share.
“The second-quarter earnings season in the U.S. is likely to be the next major driver of global markets,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients today. “With all the major U.S. banks reporting this week, the market will get the best view of the ‘self-sustaining’ U.S. economy that the Fed now sees.”
More market information is available at The Buffalo News market page.