March 20 (Bloomberg) -- U.S. stocks rose, snapping a three- day decline in the Standard & Poor’s 500 Index, as the Federal Reserve will keep up its bond buying to stimulate the economy and euro-area leaders weighed options for Cyprus.
Adobe Systems Inc. climbed 4.2 percent as the software maker reported sales and profit that exceeded analysts’ estimates. BlackBerry added 8.5 percent after Morgan Stanley raised its rating on the Canadian smartphone maker. Lennar Corp. gained 5.7 percent after posting first-quarter earnings that beat projections. FedEx Corp. slumped 6.9 percent as it lowered its 2013 earnings forecast amid a widening customer shift to cheaper overseas shipments.
The S&P 500 advanced 0.7 percent to 1,559.46 at 3:16 p.m. in New York, trading within six points of its record reached in 2007. The Dow Jones Industrial Average rose 68.82 points, or 0.5 percent, to 14,524.64. Trading in S&P 500 stocks was 6.6 percent below the 30-day average during this time of day.
"The Fed essentially did what’s to be expected, which is to reinforce that the economy still needs support," Hank Herrmann, Overland Park, Kansas-based chief executive officer of Waddell & Reed Investment Management Co., said in a phone interview. His firm manages $103 billion. "Cyprus just reminds us all the fragility of the economic circumstances in Europe. As you look at the economic data, pretty much everywhere outside the U.S. has been equally unconvincing in terms of any kind of expansion."
More than three years into the expansion, the central bank led by Chairman Ben S. Bernanke is pressing on with open-ended purchases of Treasury and mortgage securities to boost the pace of growth and heal a labor market still scarred by the deepest recession since the Great Depression.
The S&P 500 has surged 131 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Fed embarked on three rounds of bond purchases to stimulate the economy. The benchmark index rose to within two points of its 2007 record last week while the Dow hit an all-time high.
The Federal Open Market Committee, at the conclusion of a two-day meeting in Washington, left unchanged its statement that it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and inflation is projected to be no more than 2.5 percent.
Policy makers lowered their expectations for the unemployment rate at the end of the year to a range of 7.3 percent to 7.5 percent, from a previous forecast of 7.4 percent to 7.7 percent. The economy will expand 2.3 percent to 2.8 percent this year, they estimate, compared with their earlier forecast of 2.3 percent to 3 percent growth.
Stocks rallied earlier today as euro-area leaders weighed options for Cyprus. Investors speculated that the European Central Bank will continue to support the country’s banks until next week after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits.
"In a lot of ways what’s happening in Cyprus only serves to reinforce the Fed’s current policy," Richard Helm, a portfolio manager at New York-based Cohen & Steers, which oversees more than $40 billion, said in a phone interview. "It puts to bed that the Fed might raise rates sooner than later if you do have issues re-emerging in Europe."
Nine of 10 S&P 500 groups gained as consumer companies climbed the most, rising at least 1.1 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, slid 14 percent to 12.33, after a 27 percent jump over two days. The gauge, known as the VIX, is down 32 percent this year.
Adobe gained 4.2 percent to $42.44, as the maker of Photoshop software reported sales for the quarter ended March 1 of $1.01 billion, beating the average analyst estimate of $985.8 million. Profit excluding some items was 35 cents a share, exceeding the average analyst projection of 31 cents.
BlackBerry, formerly Research In Motion Ltd., surged 8.5 percent to $16.31. Morgan Stanley raised its rating on the Canadian-based phone company to overweight from underweight. The BlackBerry 10 device may boost gross margins and average selling prices, Morgan Stanley analyst Ehud Gelblum said in a note.
Family Dollar Stores Inc. rallied 3.8 percent to $60.35, pacing gains among discount retailers. Dollar Tree Inc. advanced 3.7 percent to $46.01, while Dollar General Corp. rose 3.5 percent to $49.42.
An S&P index of homebuilders climbed 4.2 percent to the highest level since July 2007. Lennar jumped 5.7 percent to $43.78. The third-biggest U.S. homebuilder by revenue said earnings rose in the fiscal first quarter as prices and sales increased amid a broadening national housing recovery. First- quarter earnings climbed to 26 cents a share, exceeding the average analyst projection of 15 cents.
Toll Brothers Inc., the largest U.S. luxury-home builder, added 6.1 percent to $36.62. Orders are up 49 percent for the spring, Chief Executive Officer Douglas Yearley said today on Bloomberg Television.
FedEx fell 6.9 percent to $99.11. The operator of the world’s largest cargo airline said profit in the fiscal year through May will be $6 to $6.20 a share, down from an earlier forecast of as much as $6.60. Both the projection and fiscal third-quarter profit trailed analysts estimates.
The company, an economic bellwether because it moves goods as varied as medical supplies and auto parts, is in the midst of a $1.7 billion restructuring to compensate for customers moving away from the fastest, most lucrative deliveries. Starting in April, it will decrease capacity to and from Asia and put low- yielding shipments in less expensive networks, Chief Executive Officer Fred Smith said.
Cintas Corp. dropped 6.8 percent to $42.82 after the provider of restroom supplies and entrance mats said it expects full-year earnings per share of $2.50 to $2.54. That compares with a previous forecast of $2.50 to $2.58.
--With assistance from Namitha Jagadeesh in London and Jeff Kearns and Joshua Zumbrun in Washington. Editor: Jeff Sutherland
To contact the reporters on this story: Lu Wang in New York at email@example.com; Sarah Pringle in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Lynn Thomasson at email@example.com