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S&P 500 Caps Best Weekly Gain Since June Amid Black Friday Sales

Nov. 23 (Bloomberg) -- U.S. stocks climbed, giving the Standard & Poor’s 500 Index its biggest weekly rally since June, after data showed German business confidence unexpectedly expanded and the American holiday shopping season began.

Hewlett-Packard Co., Dell Inc. and Advanced Micro Devices Inc. gained more than 4.1 percent as computer companies led the advance. Research In Motion Ltd. jumped 14 percent in U.S. trading today after an 18 percent increase in Toronto yesterday on optimism over the BlackBerry maker’s newest smartphones. Macy’s Inc. and Bed Bath & Beyond Inc. added at least 1.7 percent as millions visited stores on Black Friday.

The S&P 500 rose 1.3 percent to 1,409.15 at 1 p.m. New York time. The benchmark measure gained 3.6 percent this week, the most since June 8. The Dow Jones Industrial Average advanced 172.79 points, or 1.4 percent, to 13,009.68. The U.S. stock market was shut yesterday for Thanksgiving and closed at 1 p.m. New York time today. Trading in S&P 500 companies was 25 percent below the 30-day average at this time of day.

“People are trying to get a sense of what the holiday shopping season will be in the U.S.,” said James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management. “It’s good news that business confidence is picking up in Germany. Other than that, there’s not much driving the market today in this shortened session.”

Business Climate

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, climbed to 101.4 from 100 in October, the first gain in eight months. Economists predicted a drop to 99.5, according to the median of 48 forecasts in a Bloomberg News survey. French business confidence increased from the lowest in more than three years this month, a separate report showed today.

European Union leaders deadlocked over the next seven-year budget, adding to the quarrels between rich and poor countries that have stymied the response to the euro debt crisis. The positions are still “quite far apart,” German Chancellor Angela Merkel told reporters as the meeting resumed today.

The S&P 500 rallied for a fifth day in the longest streak since August after housing data exceeded economists’ forecasts and President Barack Obama expressed confidence on a budget agreement with Congress. Obama met with senior Democrats and Republicans on Nov. 16 for talks to avoid $607 billion of automatic tax increases and spending cuts that, if allowed to come into force, might push the country into a recession next year. Congress is in recess for Thanksgiving until Nov. 26.

‘More Confidence’

“People are going to need a little bit more confidence about the political class being able to work out a deal,” Tobias Levkovich, chief U.S. equity strategist at Citigroup Inc. said in a Bloomberg Radio interview. “Both sides prefer to get this done before the end of the year.”

Technology shares had the biggest gain the S&P 500 among 10 industries, climbing 1.6 percent. HP advanced 4.2 percent to $12.44, while Dell jumped 5.4 percent to $9.55. Advanced Micro Devices, the second-largest maker of personal-computer processors, increased 4.3 percent to $1.95. The three stocks have had the biggest declines in the S&P 500 Information Technology Index this year, slumping at least 34 percent.

RIM surged 14 percent to $11.66 in U.S. trading today. RIM’s Canadian shares had their biggest gain in more than three years yesterday after National Bank Financial lifted its price target for U.S. shares to $15 from $12, saying new BlackBerry 10 sales should be better than expected. It followed a Nov. 20 report from Jefferies & Co. that said chances are improving that the new BlackBerry 10 smartphones will revive sales when they hit stores in February.

Black Friday

Today is Black Friday, traditionally the beginning of the holiday shopping season in the U.S., when retailers lure customers with deep discounts. The name recalls a time when U.S. retailers would use the day to make a big part of their annual profit, and income statements would go to black from red.

A measure of retailers in the S&P 500 gained 1.1 percent. Macy’s, the second-largest U.S. department-store chain, added 1.8 percent to $41.73. Bed Bath & Beyond, the operator of more than 1,000 home-furnishing stores, rose 2.1 percent to $60.16.

Higher-income Americans may refrain from spending cuts in the holiday shopping season even though their taxes are poised to rise, said Jack A. Ablin, chief investment officer at BMO Harris Private Bank. He studied a ratio that compares the stock performance of three retailers catering to wealthier consumers and three other chains focusing on lower-income shoppers.

Fiscal Cliff

Shares of the high-end stores have done better in this year’s second half as the federal government approaches the fiscal cliff. Income-tax cuts under President George W. Bush are due to expire at year-end, and a new levy to help finance expanded health-care coverage will be imposed.

“Investors believe that high-income households will fund their higher tax burden from savings, rather than by cutting spending,” wrote Ablin, who is based in Chicago.

Ablin cited Nordstrom Inc., Coach Inc. and Ralph Lauren Corp. as high-end retailers and Wal-Mart Stores Inc., Family Dollar Stores Inc. and Dollar Tree Inc. as low-end merchants.

Since falling to this year’s low on June 26, the ratio between these indexes has climbed 21 percent. Nordstrom’s and Ralph Lauren’s shares have gained as much as 20 percent during this period. Dollar Tree’s stock, on the other hand, has lost as much as 32 percent.

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