U.S. Stocks Advance, Led by Oil, Metals Producers; Exxon Gains

By Michael Patterson


Nov. 6 (Bloomberg) -- U.S. stocks rose the most in four days, led by energy and metals producers, after oil climbed to a record and gold advanced to a 27-year high.

Exxon Mobil Corp., the largest U.S. oil company, posted its steepest advance since August, while Newmont Mining Corp., the world's second-biggest gold miner, rallied to the highest since July 2006. Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. led a rebound in financial shares after three days of declines pushed valuations to a 10-year low.

The Standard & Poor's 500 Index added 18.1, or 1.2 percent, to 1,520.27. The Dow Jones Industrial Average increased 117.54, or 0.9 percent, to 13,660.94. The Nasdaq Composite Index rose 30, or 1.1 percent, to 2,825.18. Almost three stocks gained for every one that fell on the New York Stock Exchange. Benchmark indexes in Asia and Europe also climbed.

``Materials are feeding the global boom,'' said Michael Williams, who helps oversee $2.8 billion as managing director of Genesis Partners in New York. As for financial stocks, ``they're coiled like a spring, and people don't recognize their power and the short-term nature of the writedowns.''

Today's gains were led by this year's best performing industries. Energy companies in the S&P 500 have rallied 29 percent since December, the top advance among 10 groups, as oil prices climb toward $100 a barrel. Producers of raw materials have added 24 percent as an expanding global economy boosts demand.

Energy Rally

Exxon rallied $2.72 to $90.38. Chevron Corp., the second- biggest U.S. oil company, added $2.16 to $90.64. The S&P 500 Energy Index climbed 2.7 percent, the steepest gain among 10 industries.

Crude oil rose to a record above $97 a barrel in New York as a storm forecast to produce 36-foot waves in the North Sea forced BP Plc and ConocoPhillips to evacuate workers and cut production. Crude for December delivery settled at $96.70 a barrel, up 2.9 percent.

Raw-materials producers in the S&P 500 advanced 2.5 percent as a group. Newmont added $2.16 to $54.50. Freeport-McMoRan Copper & Gold Inc., the world's second-biggest copper miner, gained $3.33 to $113.50.

Gold futures for December delivery rose $12.60, or 1.6 percent, to $823.40 an ounce as record oil prices and a slumping dollar increased concern that inflation will accelerate. Copper also gained, halting a six-session decline, on speculation the dollar's slide to an all-time low against the euro will boost demand from buyers holding other currencies.

Bank Valuations

JPMorgan Chase, the third-biggest U.S. bank by assets, added $1.34 to $44.11. Bank of America, the second largest, climbed $1.11 to $45.56. Wells Fargo added $1.02 to $32.95.

At the end of last week, the KBW Bank Index traded for 1.45 times its 24 members' net assets, the lowest valuation since January 1997, according to weekly data compiled by Bloomberg.

The S&P 500 Financials Index added 1.7 percent today. Goldman Sachs Group Inc., which had dropped 12 percent in the past three trading sessions, gained $4.77 to $223.16 after denying market speculation that the most-profitable securities firm was preparing to announce a large writedown.

`No Truth'

``The rumors seem to be getting more fanciful by the minute,'' said Lucas van Praag, a spokesman at Goldman in New York. ``We said there was no truth to them last week and the situation has not changed.''

MasterCard Inc. advanced $13.47 to $199.40. Deutsche Bank Securities raised its recommendation on the second-biggest payment-card network to ``buy'' from ``hold,'' increased its price estimate for the stock by 88 percent to $250 and lifted its revenue and earnings forecasts for 2007.

Ambac Financial Group Inc., the world's second-largest bond insurer, jumped the most since its 1991 initial public offering and led other debt insurers higher after it rebutted comments by Morgan Stanley analyst Ken Zerbe last week that Ambac faces a ``downward spiral'' and may go out of business.

The company said Zerbe's estimate for losses on securities it guarantees is based on an inaccurate assessment of its portfolio. Ambac, which has tumbled 69 percent this year, gained $3.39, or 14 percent, to $27.99 today. MBIA Inc., the biggest bond insurer, increased $2.42 to $35.65.

Financial shares have dropped 12 percent as a group in the past month as firms announced writedowns on their holdings of mortgage securities and corporate loans, and investors speculated more losses lie ahead.

Google Gains

Google Inc. helped push computer-related stocks higher. The owner of the world's most popular search engine increased $16.14 to a record $741.79 after Sanford C. Bernstein & Co. lifted its 12-month share-price forecast to $850 from $720, saying Google's expansion into mobile-phone software and Internet video will improve revenue and earnings.

Research In Motion, maker of the BlackBerry e-mail phone, added $3.07 to $131.04. Credit Suisse Group upgraded the company to ``outperform'' and said the shares may reach $160 in the next 12 months. Annual profits may increase at a 40 percent pace in the next three to five years, boosted by higher demand from international markets, analysts including Michael Ounjian said.

Cisco Systems Inc. gained $1 to $34.08. The world's biggest maker of computer-networking equipment may report a ``solid quarter'' with profit and revenue that exceed analysts' estimates, RBC Capital Markets analyst Mark Sue wrote in a research note. Cisco reports quarterly results tomorrow.

Earnings at technology companies in the S&P 500 may climb 10.3 percent this year and 24 percent next year, according to the average of analysts' estimates compiled by Bloomberg on Nov. 2. The 2008 profit growth estimate is the highest among 10 industry groups.

'Change of Leadership'

``We're in the midst of a big change in leadership here,'' said Lincoln Anderson, who helps oversee about $165 billion as chief investment officer at LPL Financial Services in Boston. ``Tech and the rest of the growth side are really coming back.''

Emerson Electric Co. led a 1.1 percent advance in the S&P 500 Industrials Index after the world's largest maker of power equipment for oil companies said fourth-quarter earnings rose 18 percent on sales of products used to automate plants and refineries. Emerson also raised its quarterly dividend by 14 percent. The stock gained $2.75 to $54.28.

Archer Daniels Midland Co. climbed $2.37 to $36.89. The world's largest grain processor said first-quarter profit rose 9.4 percent as increased sales of wheat, corn and soybeans more than made up for declines in ethanol prices.

The Morgan Stanley Capital International Asia Pacific Index added 0.6 percent, while Europe's Dow Jones Stoxx 600 Index increased 0.4 percent.

Citigroup, Cognizant

Citigroup Inc. dropped 82 cents, or 2.3 percent, to $35.08 for the biggest decline in the Dow average. The largest U.S. bank by assets provided $7.6 billion of emergency financing to the seven structured investment vehicles it runs after they were unable to repay maturing debt.

The stock was also downgraded to ``neutral'' from ``buy'' at Banc of America Securities, and analysts at CreditSights Inc. said Citigroup may have to write down an additional $2.7 billion worth of subprime-mortgage backed and related securities.

Cognizant Technology Solutions Corp. posted the biggest drop in the S&P 500 after the computer-services provider forecast fourth-quarter sales that missed analysts' estimates. The shares dropped $7.61, or 19 percent, to $32. International Business Machines Corp., the world's largest computer-service provider, declined 23 cents to $113.17.

Sun Microsystems Inc. lost 55 cents, or 9.6 percent, to $5.16, the biggest drop since April. The world's third-largest server maker said first-quarter revenue rose less than 1 percent to $3.22 billion. The average estimate in a Bloomberg survey of analysts was $3.26 billion.

The Russell 2000 Index, a benchmark for companies with a median market value of $629 million, gained 1.4 percent to 801.77. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, added 1.2 percent to 15,354.81. Based on its advance, the value of stocks increased by $226.1 billion.