extending a third straight monthly gain for benchmark indexes, amid improving economic data and as billionaire investor Warren Buffett said he’s looking to make more acquisitions.
Berkshire Hathaway Inc.’s Class B shares rose 2.1 percent as Buffett’s company said profit jumped 43 percent to the highest since 2007. Walgreen Co. climbed 4.1 percent after Morgan Stanley raised its share-price estimate for the largest U.S. drugstore chain. Humana Inc., the biggest provider of U.S.- backed health benefits, jumped 5 percent after raising its profit forecast. Amazon.com Inc. slumped 2.5 percent after UBS AG cut its recommendation for the largest online retailer.
The S&P 500 advanced 0.4 percent to 1,325.34 at 12:52 p.m. in New York, rallying for a second straight day. The gauge is up 3 percent this month. The Dow Jones Industrial Average rallied 77.04 points, or 0.6 percent, to 12,207.49 today.
“Warren Buffett is always out there to buy companies at the right price,” said E. William Stone, who oversees about $105 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “He has enough cash to do what he wants to do. On top of that, the economy continues to recover and earnings will not be affected by the situation in oil prices. We see pressure coming off the oil market. There’s a sense the market can handle Libya covering the supply.”
Middle East Crisis
The S&P 500 had the biggest drop in three months last week as Libya’s anti-government uprising pushed oil prices higher and prompted concern economic growth may falter. Oil was little changed today as Saudi Arabia offered to make up for supplies lost because of unrest in Libya and on reports the North African country is exporting crude. Still, crude is trading near a two- year high.
The benchmark gauge for U.S. stocks has risen 5 percent this year through Feb. 25 amid government measures to stimulate the economy and higher-than-estimated corporate earnings. Per- share profit topped estimates at 71 percent of the 460 companies in the S&P 500 that have reported results since Jan. 10, according to data compiled by Bloomberg.
Earlier, futures maintained gains as government data showed personal incomes climbed 1 percent, more than the 0.4 percent median estimate in a Bloomberg News survey of economists, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December. Inflation remained below the Federal Reserve’s long-term forecast.
Business Barometer
Stocks also rose after the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge was projected to fall to 67.5, according to the median estimate of 52 economists surveyed by Bloomberg News.
The dollar fell to its lowest since November against the currencies of six U.S. trade partners on bets Federal Reserve Chairman Ben S. Bernanke will signal to Congress the central bank plans to maintain economic stimulus. Bernanke is scheduled to deliver the Fed’s semiannual report on monetary policy tomorrow to the Senate Banking Committee and is due to testify to the House Financial Services Committee the following day.
Federal Reserve Bank of New York President William Dudley said the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Dudley spoke today in a speech in New York.
Berkshire Hathaway Class B shares added 2.1 percent to $86.66. Fourth-quarter net income advanced to $4.38 billion, or $2,656 a share, from $3.06 billion, or $1,969, a year earlier, Omaha, Nebraska-based Berkshire said on its website.
‘Trigger Finger’
Buffett said his “trigger finger is itchy” for takeovers after cash holdings at his Berkshire Hathaway climbed to $38.2 billion. “Our elephant gun has been reloaded,” Buffett said on Feb. 26 in his annual letter to shareholders.
“It’s another positive influence for confidence,” said Liam Dalton, New York-based president of Axiom Capital Management Inc., which oversees $1.4 billion. “It supports a lot of what we’re dealing with right now -- improving data in the real economy hasn’t reversed. There hasn’t really been any real weakening. A Buffett remark perpetuates that trend.”
Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion announced through this date last year, according to data compiled by Bloomberg.
Greater Voting Rights
A share of Berkshire Hathaway changed hands on the Nasdaq Stock Market for $189,999 before the official open of U.S. exchanges at 7:21 a.m., 49 percent above the Feb. 25 close. The company’s Class A stock, which carries greater voting rights, closed at $127,550 on Feb. 25. There were no additional trades before the shares opened at 9:30 a.m. for $129,000, according to Bloomberg data.
Alexandra Honeysett, a Nasdaq spokeswoman, declined to comment. NYSE Euronext’s Jill Archibald also declined to comment.
Walgreen added 4.1 percent to $43.68. Morgan Stanley boosted its share-price estimate for the drugstore chain to $50 from $44, while raising its second-quarter profit forecast citing stronger-than-estimated sales stemming from flu trends. Morgan Stanley also expects Walgreen stock to rise over the next 30 days.
Humana rose 5 percent to $65.72. The biggest provider of U.S.-backed health benefits boosted its full-year per-share profit forecast to $5.95 to $6.15. The shares were raised to “buy” from “hold” at Stifel Nicolaus.
Nationwide Health Soars
Nationwide Health Properties Inc. jumped 9.9 percent, the most in the Russell 1000 Index, to $42.81. Ventas Inc., the second-biggest U.S. health-care real estate investment trust by market value, agreed to buy Nationwide Health for about $5.7 billion. Ventas slid 3.1 percent to $55.42.
Amazon fell 2.5 percent to $172.90. UBS downgraded the stock to “neutral” from “buy”, citing potential margin pressures because of a more prolonged investment period and free subscription streaming. UBS also reduced its 12-month share- price estimate to $180 a share from $195.
Barclays Plc forecast the S&P 500 will advance to 1,450 in 2011, up from a previous prediction of 1,420. Barry Knapp, the New York-based chief equity strategist for the firm, lifted his 2011 profit estimate for the benchmark gauge to $93 from $91, citing better-than-estimated fourth-quarter earnings and increased confidence in the financial sector.
“We are more optimistic than we have been at this time in each of the last two years,” Knapp wrote in a report dated Feb. 25. “Our base case is for a favorable first half, resulting in a more upbeat full-year outlook for 2011.”
The firm also raised its recommendation for industrial companies to “overweight” and health-care and financial stocks to “marketweight,” while lowering its rating of consumer discretionary companies to “marketweight.”
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