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Stocks rise as optimism grows over ending budget impasse

By Alex Barinka and Aubrey Pringle
Bloomberg News

NEW YORK: Stocks rose in Friday trading, with the Standard & Poor’s 500 index trimming a weekly decline, as optimism grew that the lawmakers would reach a deal to end the budget impasse and avoid a default on the federal debt.

All 10 main groups in the S&P 500 advanced at least 0.2 percent. Walt Disney Co. jumped 2 percent and Boeing Co. added 1.7 percent to pace gains among large companies. Facebook Inc. gained 3.8 percent as the operator of the world’s most popular social network said it will sell advertising on its Instagram photo service. Union Pacific Corp. declined 1 percent after its earnings forecast missed analysts’ projections.

The S&P 500 climbed 0.7 percent to 1,690.50. The Dow Jones industrial average added 76.10 points, or 0.5 percent, to 15,072.58.

“There’s a working presumption that this is fundamentally theater and it’s going to work itself out favorably,” Mackintosh Pulsifer, vice chairman and chief investment officer of Fiduciary Trust Co. International in New York, said in a phone interview. He helps oversee $15 billion. “There will not be a default, we’ll find some way to raise the debt ceiling, and government workers will go back to work. In a few weeks it’s not going to have any impact.”

The S&P 500 dropped 0.1 percent this week, trimming a decline that reached as much as 1.3 percent.

The budget impasse has raised concern that lawmakers will be unable to make progress on a deal to increase the debt limit. The Treasury has said measures to avoid exceeding the $16.7 trillion cap will be exhausted by Oct. 17 and warned Thursday that a default could have catastrophic consequences that might last decades.

“A federal default is a bigger concern for markets than the budget disagreement,” said Manish Singh, who helps manage $2 billion as head of investments at Crossbridge Capital in London.

The shutdown delayed the release of the Labor Department’s monthly payrolls report, which was due Friday.

The lack of data is making it harder for Fed policy makers to assess the health of the economy as they consider when to start paring unprecedented monetary stimulus.

The Federal Reserve stimulus and better-than-forecast corporate earnings have helped the S&P 500 rally 19 percent this year and as much as 155 percent from its March 2009 low.

All but one of 24 groups in the S&P 500 advanced Friday, with real-estate stocks retreating 0.2 percent.

Raw-materials and health-care companies added at least 1.1 percent to pace gains among 10 main industries.

Freeport-McMoRan Copper & Gold Inc. climbed 2.3 percent to $33.78 as copper prices rallied.

Dentsply International Inc. jumped 2.9 percent to $44.49.

Bank of America raised its rating on shares in the dental supplies maker to “buy.”

Disney climbed 2 percent to $65.30 and Boeing climbed 1.7 percent to $117.20 for the two biggest gains in the Dow.

Facebook rose 3.8 percent to $51.04 after saying it will sell advertising space on Instagram in its first effort to make money from its biggest ever acquisition. The stock has surged 92 percent in 2013.

In the most anticipated technology offering since Facebook, Twitter Inc. made public its S-1 prospectus and said it’s seeking to raise $1 billion.

The documents suggested a valuation of $12.8 billion for the microblogging service.

Delta Air Lines Inc. rallied 2.7 percent to a record $25.19, capping its ninth advance in the past 10 sessions.

Chief Executive Officer Richard Anderson said at a conference in New York that the carrier is not seeing any travel decline from the government shutdown. Demand is “really strong,” he said.

Lockheed Martin Corp. fell 0.3 percent to $122.50.

The largest U.S. government contractor, which has operations in Akron, said it has identified about 3,000 employees for furloughs on Oct. 7 because of the federal shutdown.

The stock has dropped six straight sessions, the longest losing streak since June.

Union Pacific dropped 1 percent to $153.90 after the railroad operator said it sees third-quarter earnings of $2.45 to $2.48 a share, compared with the average analyst forecast of $2.56. Operating revenue will increase as much as 4.5 percent, the company said, compared with a 7 percent gain predicted by analysts.

CSX Corp. slid 0.4 percent to $25.57.

The rail transportation company said in a service bulletin that it expects Tropical Storm Karen to cause shipment delays of 12 to 24 hours.

Forecasters do not expect the storm to become a hurricane.

Energy stocks increased 0.9 percent after oil rallied as Karen threatened crude production in the Gulf of Mexico region. Exxon Mobil Corp. rose 1 percent to $86.32. Crude oil for November delivery rose 53 cents to $103.84 in New York as offshore oil rigs in the Gulf braced for bad weather.

Marathon Oil Corp. gained 2.1 percent to $34.79. The oil explorer said it has moved a rig out of the path of the storm and evacuated all workers from its Ewing Bank platform in the Gulf.

Gold for December delivery edged down $7.70 to $1,309.90 an ounce. December contracts for silver fell 3.4 cents to $21.752 an ounce.


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