Rebound as banks rally on news of safeguards

Dow Jones:12,043.56 (+108.98) Nasdaq:2,688.28 (+35.39) S&P 500:1,280.10 (+11.65)

US STOCKS advanced, breaking a three-day losing streak for the Standard and Poor’s 500 Index, as regulators issued capital rules to safeguard the global financial system and technology companies rallied.

Bank of America, US Bancorp, Huntington Bancshares rose at least 2.7 per cent as lenders climbed. Microsoft jumped 3.7 per cent, helping to lead a gauge of technology shares in the S&P 500 to the biggest gain within 10 groups.

Amazon.com added 4.5 per cent after Morgan Stanley added the world’s largest online retailer to its “Best Ideas” list.

The S&P 500 gained 0.9 per cent to 1,280.10. The benchmark index for American equities had fallen 2.1 per cent over the last three days.

The Dow Jones Industrial Average rose 108.98 points, or 0.9 per cent, to 12,043.56 today. More than six billion shares changed hands on US exchanges, about 4.8 per cent more than a week ago.

The requirements for banks “are less onerous than had been feared” said Scott Tapley of Source Investment Advisors in South Bend, Indiana. “Sooner they’ll be able to return capital to shareholders through dividends and buybacks.” The KBW Bank Index gained 1.4 per cent as 20 of its 24 stocks advanced.

US Bancorp added 2.7 per cent to $24.57. Huntington Bancshares rallied 3.6 per cent to $6.32. Bank of America rose 3.1 per cent to $10.85. The biggest US lender was “massively undervalued” as the stock traded for less than the cash on its balance sheet is worth, said Richard Bove of Rochdale Securities LLC.

Microsoft climbed 3.7 per cent to $25.20. Amazon gained 4.5 per cent to $201.25.

Morgan Stanley raised its share-price estimate for the company to $245, citing potential for operating margin expansion. Stanley Black and Decker added 0.3 per cent to $69.50 after agreeing to buy Niscayah for 7.6 billion kronor, outbidding Securitas AB to secure expansion in the market for electronic security systems.

Investors will receive 18 kronor a share in cash under the terms of the offer, New Britain, Connecticut-based Stanley said. The price is 47 per cent higher than the Niscayah’s closing price prior to the $910 million bid from Securitas. – (Bloomberg)