May 27 (Bloomberg) — U.S. stocks advanced, lifting the Standard & Poor's 500 Index to a new intraday high, after durable goods orders unexpectedly rose and JBS SA offered to buy Hillshire Brands Co. for $6.4 billion.
Hillshire jumped 21 percent as JBS's Pilgrim's Pride Corp. unit made an unsolicited bid for the maker of Jimmy Dean sausages and Ball Park hot dogs. Pfizer Inc. added 0.9 percent after abandoning its attempt to buy AstraZeneca Plc. Bank of America Corp. climbed 3.1 percent after resubmitting its capital plan to the Federal Reserve. Cisco Systems Inc. rose 1.2 percent as Deutsche Bank AG analysts recommended buying the shares.
The S&P 500 rallied for a fourth day, increasing 0.4 percent to 1,908.98 at 10:08 a.m. in New York. The Dow Jones Industrial Average gained 59.21 points, or 0.4 percent, to 16,665.48. The Nasdaq Composite Index added 0.7 percent and the Russell 2000 Index jumped 0.9 percent.
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"Macro data like the durable number today will continue to do better in the second half of the year," Daniel Skelly, an equity strategist at Morgan Stanley Wealth Management in New York, said in a phone interview. His firm had more than $1.9 trillion in client assets at the end of first quarter. "That'll be positive for the market."
U.S. equity markets were closed yesterday for the Memorial Day holiday. The S&P 500 trades at 16.1 times the average projected earnings of its members, up from a multiple of 14.8 on Feb. 3, according to data compiled by Bloomberg.
Durable Goods
Orders for durable goods climbed for a third month in April, a sign U.S. factories will help the world's biggest economy strengthen. Bookings for goods meant to last at least three years rose 0.8 percent after a 3.6 percent gain in the prior month that was stronger than previously reported, Commerce Department figures showed. The median forecast of 68 economists surveyed by Bloomberg called for a 0.7 percent drop.
In other economic reports, the Conference Board's index of U.S. consumer confidence increased to 83 in May from 81.7 a month earlier. The S&P/Case-Shiller index of property prices in 20 U.S. cities increased 12.4 percent from March 2013 after a 12.9 percent gain in the year ended in February.
Hillshire rallied 21 percent to $44.89. Pilgrim's Pride offered $45 a share in cash for the company, according to a statement today. The combined entity would have sales of $12.4 billion.
Pfizer, AstraZeneca
Pfizer rose 0.9 percent to $29.76. The largest U.S. drugmaker yesterday stopped its attempt to buy AstraZeneca for 69.4 billion pounds ($117 billion), saying the bid rejected by its London-based competitor represented full value. Under U.K. takeover rules, Pfizer had until 5 p.m. London time yesterday to make a firm offer. It must now wait at least three months before talks can restart with AstraZeneca.
Bank of America climbed 3.1 percent to $15.18. The second- biggest U.S. bank said regulators have 75 days to review the plan. The comprehensive capital analysis and review includes the company's requests for dividends and buybacks. It had to resubmit its proposal after finding botched accounting on structured notes issued by Merrill Lynch.
Cisco rose 1.2 percent to $24.82 as Deutsche Bank boosted its recommendation on the maker of networking equipment to buy from hold. The brokerage cited higher demand for the company's new switching, routing, security, wireless and cloud-computing products.
Staples Downgraded
Staples Inc. a maker of office stationary and furniture, slipped 0.8 percent to $11.56. Goldman Sachs cut its rating on the stock to sell from neutral, saying the company's investments will offset the benefits of closing stores and cutting costs.
The Chicago Board Options Exchange Volatility Index rose 3.4 percent today to 11.74. The gauge of U.S. equity volatility known as the VIX dropped 8.7 percent last week to 11.36, its lowest level since March 2013.
Traders are loading up on VIX call options as history shows there's a good chance stock-market volatility is about to increase. Calls on the measure, which become more valuable during times of market stress, outnumbered ones betting on a decrease in market swings by 3.4-to-1 this month, the most since 2008, data compiled by Bloomberg show. The index has closed below 15 for the past 27 days. A study from Sundial Capital Research Inc. shows the gauge usually rises after reaching such low levels.
Investors have been watching tensions between Russia and Ukraine as well as developments in Thailand after last week's coup. Ukraine's government said it inflicted "significant" losses on pro-Russian rebels and retook a major eastern airport a day after President-elect Petro Poroshenko vowed to wipe out the separatists. The violence highlights that Poroshenko faces a difficult task of uniting Ukraine after his May 25 presidential election victory.
–With assistance from Sofia Horta e Costa in London.
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