U.S. Stocks Gain, Dow Erases 2009 Loss as Bank of America Rises

June 12 (Bloomberg) -- U.S. stocks advanced, erasing the Dow Jones Industrial Average’s 2009 loss, as Bank of America Corp. rallied on higher profit estimates and investors bought shares of utilities and phone companies. Bank of America advanced 5.8 percent. Dynegy Inc. and FirstEnergy Corp. led electricity companies to the biggest gains in the Standard & Poor’s 500 Index and AT&T Inc. rallied as investors bought companies less reliant on economic growth. Fewer than 860 million shares changed hands on the New York Stock Exchange, the lowest volume this year, after a computer error halted trading in 242 companies. The S&P 500 added 0.1 percent to a seven-month high of 946.21 at 4 p.m. in New York, jumping 0.5 percent in the final 13 minutes of trading. The Dow average climbed 28.34 points, or 0.3 percent, to 8,799.26. The Russell 2000 Index of small companies rose 0.1 percent to 526.83. “Today was a counter-trend day because defensives did better,” said Kevin Shacknofsky, a Purchase, New York-based money manager at Alpine Mutual Funds, which oversees $4.5 billion. “The brokers are doing really well this quarter. They’re benefiting from good conditions in the capital markets.” Stocks have now advanced four consecutive weeks. The Dow become the last major U.S. stock gauge to give investors a profit for the year, as confidence increased that the worst recession since World War II is ending. Down 25% in March The measure, down 25 percent on March 9 after its worst start to a year, completed the recovery today. American Express Co., the biggest U.S. credit-card company, International Business Machines Corp., the largest computer services provider, and Cisco Systems Inc., the biggest networking-equipment maker, led the average’s 2009 advance. Speculation that $12.8 trillion in government spending will revive growth helped push the Dow above breakeven after the bankruptcy of General Motors Corp. and more than $100 billion of losses at Citigroup Inc. led the gauge lower. The 113-year-old average wiped out its 2009 loss two weeks after the S&P 500 and Russell 2000. NYSE Euronext halted trading in 242 companies for more than 40 minutes due to a computer malfunction. Trading resumed at about 12:10 p.m. in New York after the Big Board lost the connection to one of its order-matching engines, said Ray Pellecchia, an NYSE spokesman. Eight Dow Companies The outage affected eight companies in the Dow Jones Industrial Average, including General Electric Co. and Exxon Mobil Corp., and more than 50 stocks in the S&P 500, according to data compiled by Bloomberg. Shares of those companies continued to change hands on other markets including the NYSE Arca electronic exchange. The S&P 500 dropped during the morning after consumer confidence trailed economists’ estimates. The Reuters/University of Michigan said its sentiment gauge rose to 69 in June, missing the 69.5 average forecast in a Bloomberg survey. Bank of America had the biggest gain in the Dow average for the second day in a row, adding 5.9 percent to $13.73. Stifel Nicolaus & Co. raised its 2010 and 2011 profit forecasts. At least four other Wall Street firms have either upgraded or increased profit or share-price forecasts for Bank of America, the biggest U.S. bank by assets, this week. Utilities in the S&P 500 added 1.4 percent as a group, the most among 10 industries. Dynegy rose 3.8 percent to $2.47, and FirstEnergy advanced 3.6 percent to $40.48. AT&T, Qwest Gain Phone companies in the index climbed 0.9 percent. AT&T increased 0.9 percent to $25.01. Qwest Communications International Inc. rallied 4.6 percent to $4.32. The S&P 500 has rebounded 40 percent from its 12-year low in March. The index trades at 14.9 times its companies’ earnings from continuing operations during the past year, near the seven- month high of 15.2 reached in May and below the 19.9 average over the last decade. Vulcan Materials Co. gained 11 percent to $47.20. The largest U.S. producer of crushed stone sold 11.5 million shares at $41 each to repay debt. Rambus Inc. surged 15 percent to $17.39. The memory-chip designer said it reached a tentative settlement of a two-year- old European Union antitrust probe that includes cutting its patent royalty rates for some products. Saks Inc. added 15 percent to $4.34. The New York-based luxury retailer was upgraded to “buy” from “hold” at Deutsche Bank AG. Oil, Metals Fall Exxon, Alcoa Inc. and Freeport-McMoRan Copper & Gold Inc. retreated as crude, aluminum and copper declined. National Semiconductor Corp. spurred a technology slump after saying the computer-chip market isn’t rebounding. Exxon Mobil, the world’s largest oil company, fell 0.4 percent to $73.78. Crude oil futures retreated from a seven- month high of $72.68 a barrel after a record plunge in European industrial production. “If there’s that much excess capacity in one of the world’s largest economies, what does that say for the demand profile for basic inputs?” said Matthew Kaufler, a portfolio manager at Federated Clover Investment Advisors, which manages $2 billion in Rochester, New York. Alcoa, the largest U.S. aluminum producer, dropped 1.9 percent to $11.99 for the biggest decline in the Dow average. Freeport-McMoRan, the largest publicly traded copper producer, slipped 3.2 percent to $58.51. Copper dropped in New York and London, and aluminum also declined. Technology shares in the S&P 500 lost 0.2 percent. National Semiconductor, which supplies the top five mobile-phone manufacturers, fell 6.1 percent to $13.59. “I don’t think anyone in this industry is positive enough to say that we’ve recovered,” Chief Executive Officer Brian Halla said. Advanced Micro Devices Inc., the second-largest maker of processors for personal computers, fell 4.9 percent to $4.47. The S&P 500 hasn’t posted a daily rise or fall of 1 percent or more since June 4, the longest stretch in 14 months. Since Sept. 15, when Lehman Brothers Holdings Inc. filed the largest- ever U.S. bankruptcy, 131 out of the 188 trading days have had moves of that size.