US stocks advanced, sending the Standard & Poors 500 to its first gain of the year as positive economic news helped the benchmark index to partially offset recent declines.
The Standard & Poor’s 500 Index advanced 0.6% to 1,837.88 at 4 p.m. in New York. The gauge lost 1.2% from Jan. 2 through yesterday, the longest stretch of declines to start a year since 2005. The index climbed 30% last year, the most since 1997. The Dow average added 105.84 points today, or 0.6%, to 16,530.94.
“With a continuation of strong data from the end of last year, people are starting to think maybe 2014 will be a breakout year for the economy,” said Nick Sargen, chief investment officer at Fort Washington Investment Advisors, which has about $45 billion in assets under management. Mr. Sargen said he sees the economy expanding this year at a 3% rate or better. “People still want to put money to work, so the continued signs of strength are a catalyst for that,” he said.
One of the main reasons for the stock lift was news that the trade deficit for November narrowed to $34.25 billion on the month from a revised $39.33 billion in October, versus expectations of $40 billion, as exports increased to record levels and imports declined. Novembers deficit was the smallest since October 2009. Investors interpreted the report as providing more evidence that the economy has shifted into a slightly higher gear.
In corporate news, nine out of ten main industries in the S&P 500 rose as health-care stocks added 1% to pace gains.
UnitedHealth climbed 3.1% to $76.51. The largest publicly traded U.S. insurer was raised to buy from hold by analysts at Deutsche Bank AG. J&J, the world’s biggest maker of health-care products, increased 2.1% to $94.29 as RBC Capital Markets boosted the stock to outperform from sector perform.
Tenet Healthcare Corp. rallied 4.9% to $46.10 and HCA Holdings Inc. advanced 2.7% to $49.85. Credit Suisse, which rates both companies outperform, advised buying hospital stocks on any weakness.
Blue-chip J.P. Morgan Chase declined 1.2% and was one of just six Dow components down for the day, after the bank reached a settlement to pay victims of Bernard L. Madoffs fraud. The deal is part of a record settlement with US prosecutors to resolve allegations the bank failed to provide adequate warnings about Mr. Madoffs activities.
Netflix slumped 5.6% to $339.50. Morgan Stanley cut its rating on the stock to “underweight”, similar to a sell recommendation, from “equal weight”, citing increased competition in U.S. digital-video streaming. The stock almost quadrupled last year.
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