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S&P 500 rises for week as earnings optimism offsets jobs report

Standard & Poor’s 500 index rose for the week Jan. 10 after the worst losing streak to start a year since 2005, as optimism over economic growth and corporate earnings overshadowed a weaker-than-forecast jobs report.

Forest Laboratories Inc. (NYSE: FRX) and McKesson Corp. (NYSE: MCK) paced gains among health care companies, jumping at least 9.2 percent on deals activity.

Intercept Pharmaceuticals Inc. (Nasdaq: ICPT) soared more than sixfold after a trial of its liver disease drug worked well enough for the testing to be stopped.

Alcoa Inc. (NYSE: AA) and Chevron Corp. (NYSE: CVX) slipped more than 2.7 percent as earnings disappointed. Phone stocks fell after T-Mobile US Inc. (NYSE: PCS) announced a plan to pay off early-termination fees to attract subscribers.

The S&P 500 rose 0.6 percent to 1,842.37 for the five days. The benchmark index reached an all-time high in the previous week, before falling three straight days to start the year. The Dow Jones industrial average lost 32.94 points, or 0.2 percent, to 16,437.05 for the week.

Three rounds of monetary stimulus from the Federal Reserve have helped push the S&P 500 higher by 172 percent from a 12-year low in 2009. The Fed, which next meets Jan. 28 and 29, last month announced a reduction in its monthly bond-buying program, citing a recovery in the labor market.

A report from the Department of Labor on Friday showed employment rose in December at the slowest pace in almost three years, in part because bad weather blanketed the U.S.

The data ended months of improving job growth that had signaled the world’s largest economy was picking up.

The unemployment rate declined to 6.7 percent, the lowest since October 2008, as more people left the labor force.

Economists forecast the U.S. economy will grow at a 2.6 percent rate this year after a 1.7 percent advance in 2013. The International Monetary Fund plans to raise its forecast for global economic expansion this year, underscoring confidence as the outlook for the U.S. improves.

Alcoa unofficially kicked off the fourth-quarter earnings season on Jan. 9. Analysts forecast profits for S&P 500 companies grew by 4.9 percent in the period while sales increased 1.8 percent, according to data compiled by Bloomberg.

JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp. (NYSE: BAC) and Goldman Sachs Group Inc. (NYSE: GS) are among 29 S&P 500 companies that are scheduled to report results in the coming week.

After the S&P 500 surged 30 percent last year for the biggest annual gain since 1997, Blackstone Group LP’s (NYSE: BX) Byron Wien joined Citigroup Inc.’s (NYSE: C) Tobias Levkovich in cautioning investors about a possible correction, or a decline of 10 percent or more from a peak.

The benchmark index will slump in coming months before rallying to end the year up about 20 percent, Wien, vice chairman of Blackstone’s advisory services unit, said in his annual “10 Surprises” list.

Seven of 10 main S&P 500 groups gained for the week, with health care and utility companies jumping more than 2.5 percent.

Forest Laboratories surged 16 percent to $69. The maker of the Alzheimer’s drug Namenda said it will buy Aptalis Pharma for $2.9 billion, adding treatments for gastrointestinal ailments and cystic fibrosis.

McKesson advanced 9.2 percent to $175.44 after raising its bid for German drug distributor Celesio AG, winning support from U.S. hedge fund Elliott Management Corp., which opposed the original offer as too low.

Intercept soared $376.66 to $445.83. The company’s obeticholic acid treats nonalcoholic steatohepatitis, a liver disease in which people who don’t drink or drink very little alcohol suffer damage that resembles that of heavy drinkers. Bank of America raised the stock’s price target to $872 from $81.

Ford Motor Co. (NYSE: F) gained 3.6 percent to $16.07 after CEO Alan Mulally ruled himself out from a race for the top job at Microsoft Corp. (Nasdaq: MSFT) The automaker boosted its quarterly dividend to 12.5 cents a share from 10 cents. Shares of Microsoft retreated 2.4 percent to $36.04.

Macy’s Inc. (NYSE: M) advanced 4.3 percent to $55.84. The second-largest U.S. department-store company forecast earnings for its next fiscal year ahead of estimates and disclosed a program to cut costs that includes eliminating about 2,500 jobs.

Alcoa slumped 4.4 percent to $10.11. The largest U.S. aluminum producer reported fourth-quarter profit that missed forecasts because of a glut of rolled metal used in the aerospace industry.

Chevron Corp. declined 2.7 percent to $121.01. The world’s second-largest energy company by market value said it will report a drop in fourth-quarter earnings after oil and natural-gas production declined amid slumping prices.

Phone companies in the S&P 500 slumped 2.2 percent for the worst performance. T-Mobile US said it will pay the fees of customers switching from AT&T Inc. (NYSE: T), Sprint Corp. (NYSE: S) or Verizon Wireless (NYSE: VZ). Families could save as much as $650 per line, the company said.

AT&T dropped 3.4 percent, the most in the Dow, to $33.62 and Sprint lost 4.8 percent to $9.46. Verizon Communications Inc., which owns a stake in Verizon Wireless, fell 1.4 percent to $47.75.

Twitter Inc. (NYSE: TWTR) slumped 17 percent to $57.

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