U.S. Stocks Rise on Consumer Spending; Energy Shares Advance

Dec. 21 -- U.S. stocks gained the most in three weeks, led by oil and technology shares, after the biggest increase in consumer spending in two years helped reduce concern the economy will slow.

Schlumberger Ltd., the world's largest oilfield-services provider, led energy companies to the steepest gain in the Standard & Poor's 500 Index as crude climbed. Research In Motion Ltd., maker of the BlackBerry e-mail phone, climbed the most in two months after saying sales may top analysts' estimates. Retail shares including Macy's Inc. rose for the second time in nine days after personal spending topped projections.

The S&P 500 added 24.34, or 1.7 percent, to 1,484.46. The Dow Jones Industrial Average climbed 205.01, or 1.6 percent, to 13,450.65. The Nasdaq Composite Index increased 51.13, or 1.9 percent, to 2,691.99. More than five stocks rose for every one that fell on the New York Stock Exchange and all 24 industries in the S&P 500 gained.

``The consumer's resiliency is just amazing,'' said Bill Knapp, chief investment strategist at MainStay Investments, which manages $252 billion in New York. ``We're going to dodge that recession.''

The S&P 500 advanced 1.1 percent this week, boosted by profits at technology companies and the Federal Reserve's effort to provide banks with cash. The Dow average added 0.8 percent and the Nasdaq climbed 2.1 percent. For the year, the S&P 500 has risen 4.7 percent, the Dow average gained 7.9 percent and the Nasdaq increased 11 percent.

Consumer Spending

Consumer spending in the U.S. rose in November as incomes grew and shoppers took advantage of early holiday discounts. The bigger-than-forecast 1.1 percent rise followed a revised 0.4 percent gain in October that was more than previously estimated, the Commerce Department said today in Washington.

Energy shares climbed 2.4 percent, tied with materials companies for the most among 10 industries in the S&P 500, after the spending report signaled economic growth may spur demand for fuel.

Schlumberger added $3.86 to $94.64. Crude for February delivery rose $2.25, or 2.5 percent, to $93.31 a barrel on the New York Mercantile Exchange.

Hess Corp., the fifth-largest U.S. oil company, surged $8.69, or 9.7 percent, to $98. The stock may climb to $103, according to analysts at Credit Suisse who boosted their price estimate 29 percent.

Research In Motion

Research In Motion surged $11.64 to $118.63 after third- quarter profit more than doubled to 65 cents a share, topping analysts' estimates

Sales also doubled to $1.67 billion in the quarter ended Dec. 1. Analysts in a Bloomberg survey had estimated profit of 62 cents and sales of $1.65 billion. The company fended off competition from Apple Inc., whose iPhone went on sale in June, as well as e-mail devices from Nokia Oyj and Motorola Inc.

Profits at technology companies in the S&P 500 are expected to grow 24 percent in 2008, the most among 10 industries, according to Bloomberg estimates.

U.S. Steel Corp. climbed $6.46, or 5.9 percent, to $115.22, leading gains among raw-materials producers. Copper surged the most in five weeks after inventories in China slumped amid rising demand. Gold rose after the dollar fell against the euro, boosting the appeal of the precious metal as an alternative investment. Silver also gained.

Investors speculated China will raise export tariffs on steel products, leading to a slowdown in shipments to North America. Export duties on hot-rolled coil and long steel products will be increased to 15 percent, from between 5 percent and 10 percent, the China Securities Journal reported, without saying where it got the information.

Macy's, Home Depot

Macy's Inc., the owner of its namesake chain and Bloomingdale's, gained 47 cents to $26.54, helping lead a gauge of retailers to a 1.4 percent advance. Home Depot Inc., the biggest home-improvement retailer, added 39 cents to $26.66.

Merrill Lynch & Co. climbed $1.04 to $55.54 on a report the world's biggest brokerage may receive a $5 billion cash infusion from Singapore's state-owned Temasek Holdings Pte. Temasek's board has given preliminary approval for an investment in the firm, which is reeling from the biggest loss in its 93-year history, the Journal said.

Stocks also rose after the Federal Reserve said it will conduct biweekly emergency auctions of loans as ``long as necessary'' as part of a global attempt by central bankers to restore faith in the money markets.

Cash Infusions

The Fed and European Central Bank loaned $30 billion in 35- day funds today at an interest rate of 4.67 percent, 2 basis points more than the initial special auctions four days ago. The rates are less than the 4.75 percent banks are charged to borrow directly at the Fed's discount window, suggesting the central bank is making progress in alleviating the credit crunch.

Marsh & McLennan Cos. surged $1.32, or 5.3 percent, to $26.21. The world's largest insurance broker said it will replace Chief Executive Officer Michael G. Cherkasky after the company's performance this year fell ``far short'' of expectations. The board decided a change in leadership ``will best enable MMC to move forward and enhance shareholder value,'' the company said.

About 2.34 billion shares traded on the New York Stock Exchange, 60 percent more than at the same time last week. Trading increased with futures and options on indexes and individual stocks set to expire. Trading climbed to a record in the first hour of today's session on the New York Stock Exchange, with 903 million shares moving, 12 percent above the old high.

U.S. markets will end trading at 1 p.m. on Dec. 24 and remain closed Dec. 25 for Christmas.

M&A

Respironics Inc. climbed $12.21, or 23 percent, to $65.32 after Royal Philips Electronics NV, the world's biggest manufacturer of patient-monitoring systems, agreed to buy the company for 3.6 billion euros ($5.2 billion) in its biggest-ever acquisition. Philips will pay $66 a share in cash, 24 percent higher than yesterday's closing price. Companies worldwide announced 130 deals today totaling $26.7 billion.

Schering-Plough Corp. climbed $1.06 to $27.26 after Lehman Brothers Holdings Inc. raised its recommendation for the drugmaker to ``overweight'' from ``equal-weight,'' citing a 9.7 percent drop in the shares since Dec. 11 as a ``solid buying opportunity.'' The company's earnings and revenue should grow more than competitors, the analysts said.

Circuit City Stores Inc. plunged $1.91, or 29 percent, to $4.75, the steepest decline in the S&P 500. The second-largest U.S. consumer-electronics retailer reported a wider-than-expected third-quarter loss after discounts failed to draw customers. The company said it also now expects a fourth-quarter loss.

WaMu Probe

Washington Mutual Inc. dropped 57 cents, or 3.9 percent, to $14.10, an 11-year low. Regulators began investigating how the largest U.S. savings and loan set values for mortgages sold to investors. The SEC is examining loans that New York prosecutors claim were based on inflated home appraisals, according to a person with direct knowledge of the probe who declined to be identified because the investigation isn't public.

Jabil Circuit Inc. fell the most since June 2006, dropping $3.99, or 22 percent, to $14.43. The maker of phones for Nokia Oyj and electronics for Hewlett-Packard Co. forecast earnings that missed analysts' estimates.

The Russell 2000 Index, a benchmark for companies with a median market value of $604 million, gained 2.4 percent to 785.6. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 1.7 percent to 14,979.39. Based on its advance, the value of stocks increased by $305 billion.

Circuit City Stores Inc. (CC US)
Hess Corp. (HES US)
Macy's Inc. (M US)
Marsh & McLennan Cos. (MMC US)
Merrill Lynch & Co. (MER US)
Research In Motion Ltd. (RIMM US)
Respironics Inc. (RESP US)
Schering-Plough Corp. (SGP US)
Schlumberger Ltd. (SLB US)
U.S. Steel Corp. (X US)
Washington Mutual Inc. (WM US)