Record Intra-day in S&P 500 Index, Fitch Reaffirms U.S. Debt Rating

Nichole Harper
21 Mar, 2014
New York City

Investors turned confident and bid up stocks. Fitch Ratings reaffirmed U.S. debt rating at AAA and revised the outlook to stable from negative. The S&P 500 index reached a new intra-day record and up 2.3% in the week so far. Media General agreed to acquire LIN Media for $1.6 billion.

[R]12:40 PM New York – Investors turned confident and bid up stocks. Fitch Ratings reaffirmed U.S. debt rating at AAA and revised the outlook to stable from negative. The S&P 500 index reached a new intra-day record and up 2.3% in the week so far. Media General agreed to acquire LIN Media for $1.6 billion.[/R]

Stocks opened higher and advanced further on Wall Street after the dollar gained and market indexes in Europe and emerging markets rose despite the rising tensions between Russia and NATO nations.

U.S. imposed additional sanctions on 20 Russians and on Bank Rossiya. Department of Treasury moved to freeze assets held with the U.S. institutions and barred U.S. citizens and businesses from doing business with those on the list.

Fitch Ratings today reaffirmed rating on the U.S. debt at AAA and removed the nation’s debt from its “negative watch” list. The rating agency also said the U.S. debt outlook is stable.

The U.S. has the largest sovereign debt in the world and federal government deficit has ballooned three times to $16.7 trillion at the end of 2013 from $5.6 trillion in 2000 and debt to GDP ratio has jumped from 55% to 99% in the period.

S&P 500 index increased 0.5% or 9.25 to 1,881.22 and the Nasdaq Composite Index increased 0.11 to 4,319.37.

Most market in Europe gained at least 0.3% and in India, Brazil, Korea and Australia traded higher.

Market indexes in Shanghai surged 2.7% and in Hong Kong gained as much as 3% on the rising speculation that the government is slowly loosening restrictions to lending to property developers and banks to sustain the slower economic growth.

The stocks surged the most in four months in Shanghai and in Hong Kong. Market in Tokyo were closed for a holiday.

Investors were cautious in India ahead of national elections but rupee strengthened on the expectations of falling inflation and a rebound in industrial production. The rupee edged up 0.7% to 60.92 against one dollar.

European Markets

In London trading, FTSE 100 index edged up 0.03% or 2.22 to 6,544.66 and in Frankfurt the DAX index gained 0.2% or 23.05 to 9,319.17.

In Paris, CAC 40 index rose 0.02% or 0.89 to 4,328.80.

U.S. Stocks in Review

Darden Restaurants, Inc ((DRI)) gained 2.5% or $1.22 to $50.52 after the restaurant operator reported flat sales in the third-quarter ending on February 23 at $2.23 billion.

Net earnings in the quarter dropped 18.4% to $109.7 million or 82 cents a diluted share compared to $134.4 million or $1.02.

The company added blended same-restaurant sales declined 5.6% at Olive Garden, Red Lobster and LongHorn Steakhouse. Same restaurant-sales decline of 0.7% for the Company''s Specialty Restaurant Group.

Endocyte, Inc ((ECYT)) surged 100.8% or $14.76 to $30.08 after the biopharmaceutical company said European Medicines Agency issued a positive opinion for Vynfinit, Folcepri and Neocepri as potential treatments for adult patients with folate receptor-positive platinum-resistant ovarian cancer.

Endocyte developed these therapies and licensed to Merck in the ex-US territories under a deal worth up to $1 billion in royalty payments.

Media General, Inc ((MEG)) increased 4% to $18.05 after the company agreed to acquire LIN Media LLC for $1.6 billion. With the merger, the combined company will be the second-largest independent TV network operator with a reach of 25% of the U.S. households.

Media General after the deal will follow the largest Tribune Co which acquired Local TV Holdings for $2.7 billion. Media General said it plans to sell some stations in markets where regulators may worry about larger penetration.

LIN shareholders are expected to receive $27.82 a share in cash and Media General stock, based on the last one month of weighted average price.

Nike Inc ((NKE)) slumped 3% or $2.39 to $76.89 after the sports apparel and footwear maker reported revenue in the third-quarter ending in February climbed 13% to $7 billion.

Net income in the quarter tumbled 21% to $685 million or 76 cents a diluted share compared to $866 million or 73 cents.

Nortek Inc climbed 4.4% or $3.44 to $82.40 after the air conditioning and heating products maker agreed to buy subsidiary of ABB Ltd, Thomas & Betts Corp.'s heating, ventilation and air conditioning business for about $260 million in cash.

Symantec Corporation ((SYMC)) plunged 13.9% or $2.91 to $18 after the security and backup software provider lowered its fourth-quarter revenue guidance to the range of $1.615 to $1.655 billion compared to $1.748 billion. The company estimated diluted earnings per share between 29 cents and 31 cents from 27 cents in the year-ago period in the year-ago period.

Tiffany & Co ((TIF)) jumped 2.5% or $2.31 to $93.48 after the jewelry and watch retailer said sales in the fourth-quarter ending on January jumped 6% to $1.3 billion. Same store sales in the quarter climbed 6%.

Net in the quarter swung to a loss $103.6 million or 81 cents a diluted share compared to a profit of $179.6 million or $1.40.

For the fiscal 2015, the company forecasts net diluted earnings per share to be in the range of $4.05 to $4.15.