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Jun 06, 2012 4:52 pm ET June 6 (Bloomberg) -- U.S. stocks rallied, giving benchmark indexestheir biggest gains in 2012, on speculation global policy makerswill take steps to stimulate economic growth. Bank of America Corp. surged 7.6 percent to pace gains amongfinancial shares. Caterpillar Inc. and Exxon Mobil Corp. increasedat least 3.3 percent. Home Depot Inc., the largest U.S.home-improvement retailer, climbed 3.4 percent after raising itsstock repurchase plan by $500 million for fiscal 2012. FacebookInc. added 3.6 percent, following a 32 percent decline since thebiggest social-networking company went public. The Standard & Poor s 500 Index advanced 2.3 percent to1,315.13 at 4 p.m. New York time. The Dow Jones Industrial Averageincreased 286.84 points, or 2.4 percent, to 12,414.79. About 7.3billion shares changed hands on U.S. exchanges today, or 8.3percent above the three-month average. People are viewing central banks as very aware of the weakness ofthe global economy and looking for ways to deal with that, saidMichael Holland, chairman of New York-based Holland & Co. Hisfirm oversees more than $4 billion. In addition to that, we vehad a major selloff, valuations are low and that certainly helps tolift the market on a day like today. The S&P 500 rose 2.9 percent in three days, wiping out the lossdriven by a disappointing jobs report on June 1. Earlier this week,the index traded at 12.9 times its companies reported earnings,according to data compiled by Bloomberg. That was the cheapestvaluation in six months, the data showed. Concern about Europe sdebt crisis and a global slowdown took the S&P 500 down as muchas 9.9 percent from this year s peak. Stimulus Bets Equities rallied today as European Central Bank President MarioDraghi said officials stand ready to act as the euro region soutlook worsens. Federal Reserve Bank of Atlanta President DennisLockhart said extending Operation Twist, the program to lengthenmaturities of debt on the U.S. central bank s balance sheet, is an option on the table. The U.S. economy maintained a moderate pace of growth, according tothe Fed s Beige Book survey of business conditions. Thepolicy-setting Federal Open Market Committee meets June 19-20 toconsider whether more stimulus is needed. I would be surprised if the Federal Reserve isn t already havinga contingency plan if everything unravels in Europe, said RonFlorance, managing director of investment strategy for Wells FargoPrivate Bank. His firm manages $169 billion. Warren Buffett, the billionaire chairman of Berkshire HathawayInc., said he expects the U.S. economy to avoid another recessionas long as Europe can contain its debt crisis. There won t be arecession unless events in Europe develop in some way that spillsover here big-time, Buffett said yesterday at the Economic Clubof Washington, D.C. Biggest Gains All 10 groups in the S&P 500 rose today as energy, financialand industrial shares had the biggest gains. The Dow JonesTransportation Average climbed 3 percent. Bank of America increased7.6 percent, the most in the Dow, to $7.64. Caterpillar, thelargest maker of construction equipment, added 3.6 percent to$86.66. Exxon Mobil jumped 3.3 percent to $80.18. Home Depot rose 3.4 percent to $50.60. The timing of its sharerepurchases will not have a material impact on the diluted earningsper share in that period, the retailer said. Monsanto Co. added 3 percent to $79.20. The largest seed companywill repurchase as much as $1 billion of shares as rising profitboosts the company s cash hoard to a record. Facebook rallied 3.6 percent to $26.81. No large U.S. company isattracting more attention from short sellers than Facebook amidbets it will keep falling after losing $29 billion since itsinitial public offering. Short Interest Short interest on the Menlo Park, California-based company reached5.9 percent of shares outstanding, according to data compiled byBloomberg and Data Explorers Ltd., a New York-based research firm.None of the S&P 500 companies with at least $50 billion inmarket capitalization has short interest higher than 3 percent, thedata show. Facebook, which has a market value of about $61.6billion, isn t in the S&P 500. Facebook is one of those companies whose future potential isunknown and unknowable, said Robert Stimpson, a money manager atAkron, Ohio-based Oak Associates Ltd., which oversees about $900million and doesn t own Facebook. The stock is expensive. Theshort interest might also reflect a bet that there is more bad newsto come and Facebook will be punished. Nasdaq OMX Group Inc. s board approved a plan to pay brokers whoseorders were mishandled in Facebook Inc. s initial public offering,earmarking about $40 million to cover losses. Chesapeake Energy Corp. jumped 7.1 percent, the most since Aug. 11,to $18.21. The company is in advanced talks to sell pipelines toGlobal Infrastructure Partners for more than $4 billion, said twopeople with knowledge of the matter. Unexpected Profit A measure of homebuilders in S&P indexes gained 3.7 percent.Hovnanian Enterprises Inc. surged 18 percent, the most since Aug.15, to $2.01. The largest homebuilder in New Jersey reported anunexpected profit for its fiscal second quarter as orders jumped 52percent amid rising U.S. demand for new houses. Iron Mountain Inc. surged 14 percent, the biggest gain in theS&P 500, to $32.32. The document-storage company approved aplan to convert to a real-estate investment trust and increased itsquarterly dividend by 8 percent. Lee Enterprises Inc. soared 16 percent, the biggest gain since Jan.24, to $1.33. Buffett s Berkshire Hathaway disclosed owning astake in the owner of newspapers in the U.S. Midwest and WestCoast. Ancestry.com Inc. gained 11 percent to $25.06. The family- historyresearch website is weighing a sale and working with FrankQuattrone s Qatalyst Partners LLC to find buyers, according to aperson with knowledge of the situation. Material Costs Halliburton Co. slumped 3.5 percent to $28.10. The world s largestprovider of hydraulic-fracturing services said North Americanmargins will be 500 to 550 basis points lower this quarter thanlast because of higher material costs. Tempur-Pedic International Inc. plunged 49 percent, the most ever,to $22.39. The luxury mattress maker cut its full- year profit andrevenue forecasts amid lower-than-expected second-quarter sales inNorth America. The selloff that erased $1.78 trillion from U.S. equity values haspushed the cost of options to the highest levels of 2012, promptinghedge funds to add to short sales at the fastest rate sinceOctober. The Chicago Board Options Exchange Volatility Indexsurpassed 26 last week, a level not seen since December. The gain left the gauge near its price just before the S&P 500slumped 12 percent in August and September 2011, data compiled byBloomberg show. As the VIX has risen, an International Strategy& Investment Group measure of hedge fund bullishness hasretreated by 7.4 percent. Short Selling While the cost of hedges and the amount of short selling areincreasing, they may have further to go before bearishness isexhausted amid Europe s credit crisis, according to Wayne Lin ofLegg Mason Inc. The VIX would have to gain 45 percent to reach itsaverage price in August and September. The ISI gauge bottomed at 42last year compared with its level of 45.3 now. The concerns about Europe combined with questions about therobustness of global growth are filtering into markets, Lin, whohelps oversee $639 billion as a money manager at Baltimore-basedLegg Mason, said yesterday in a phone interview. These risks makepeople back out of equities, cause the hedge funds to go short andpush the VIX up. We are high quality suppliers, our products such as Cool Warm Mist Humidifier Manufacturer , USB Ionizer for oversee buyer. To know more, please visits Usb Ionic Air Purifier.
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