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U.S. Stocks Rise on Fed Bets After Decline in Durables Orders

August 26, 2013

Aug. 26 (Bloomberg) -- U.S. stocks rose, following the Standard & Poor’s 500 Index’s first weekly gain since Aug. 2, as investors speculated whether a report showing durable-goods orders fell in July would delay stimulus cuts.

Amgen Inc. jumped 9.6 percent after agreeing to buy cancer- treatment developer Onyx Pharmaceuticals Inc. in a $10.4 billion transaction. Facebook Inc. advanced 2.3 percent to $41.67 as the world’s largest social network’s market value exceeded $100 billion. Tyson Foods Inc., the largest U.S. meat processor, fell 6.8 percent after Bank of America Corp. analysts cut their rating on the stock.

The S&P 500 rose 0.2 percent to 1,667.25 at 12:30 p.m. in New York. The Dow Jones Industrial Average added 25.31 points, or 0.2 percent, to 15,035.82. Trading in S&P 500 stocks was 29 percent below the 30-day average at this time of day.

"It’s another data point that indicates a slow recovery," Eric Teal, who helps oversee $5 billion as the chief investment officer at First Citizens BancShares Inc. in Raleigh, North Carolina, said by phone. "Given that the Fed’s position is data dependent, then I think that the odds are increasing that there’ll be less tightening than more."

Stocks rebounded last week after a report showing a plunge in home sales eased concern that the Federal Reserve would curb stimulus efforts next month. Officials have been weighing whether the economy is strong enough to prompt a reduction in stimulus, which has helped propel the S&P 500 up as much as 153 percent from its March 2009 low.

 

Fed Debate

 

Speculation about the stimulus has whipsawed stocks since May, when Chairman Ben S. Bernanke first indicated cuts could start this year. Sixty-five percent of economists in a Bloomberg Aug. 9-13 survey said the first reduction would come at the Sept. 17-18 meeting.

The Commerce Department report today showed bookings for goods meant to last at least three years decreased 7.3 percent, the most since August 2012, after a 3.9 percent gain in June. The median forecast of economists surveyed by Bloomberg called for a 4 percent drop. Orders waned for aircraft and capital goods such as computers and electrical equipment.

The Chicago Board Options Exchange Volatility Index, or VIX, rose 0.3 percent to 14.02. The equity volatility gauge reached its highest level this year in June and has since fallen 32 percent.

Seven of 10 major groups in the S&P 500 rose today. Shares in raw-materials producers gained 0.9 percent to pace advances.

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