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Old June 10th, 2013, 12:39 PM
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U.S. Stocks Fluctuate After S&P Boosts Outlook on America

By Lu Wang - Jun 10, 2013 10:10 AM ET
U.S. stocks fluctuated between gains and losses, following the biggest two-day gain for the Standard& Poor’s 500 Index since January, after S&P boosted its outlook for America and Chinese data trailed estimates.
Tesla Motors Inc. (TSLA) lost 2.2 percent after a report that the shares may drop to $50. McDonald’s Corp. climbed 1.6 percent on better-than-estimated sales growth in May as the Dollar Menu and breakfast items helped drive the U.S. business. Monsanto Co. jumped 4.4 percent after Macquarie Group Ltd. raised its rating on the world’s largest seed company to outperform.
The S&P 500 fell 0.2 percent to 1,639.58 at 10:08 a.m. inNew York. The Dow Jones Industrial Average dropped 27.15 points, or 0.2 percent, to 15,220.97. Trading in S&P 500 (SPX) stocks was in line with the 30-day average during this time of day.
U.S. equities rose last week as U.S. companies added more workers to payrolls than economists forecast, signaling the economy continues to expand. The U.S.’s AA+ credit rating outlook was increased today to stable from negative by Standard& Poor’s, which cited receding fiscal risks. S&P, the world’s largest credit rater, cut the U.S. ranking from AAA in August 2011, contributing to a global stock-market rout and sending yields on Treasury bonds to record lows.
Fed Bank of St. Louis President James Bullard said inflation below the central bank’s 2 percent target warrants prolonging the “aggressive” use of bond buying to spur growth and bring down unemployment.
While “labor market conditions have improved since last summer,” Bullard said in remarks prepared for a panel discussion in Montreal, “surprisingly low inflation readings may mean the Committee can maintain its aggressive program over a longer time frame.”
Bull Market

Stimulus from the Federal Reserve and better-than-estimated earnings have propelled the bull market in U.S. equities into a fifth year and driven the S&P 500 up 143 percent from a 12-year low in 2009. The index is still 1.5 percent below its record high from May 21, the day before Fed Chairman Ben S. Bernankesuggested the central bank could curtail its $85 billion monthly bond purchases if the economy improved in a “real and sustainable way.”
China’s industrial production rose a less-than-forecast 9.2 percent last month, while export gains were at a 10-month low and imports dropped, data over the weekend showed.
Japan’s Topix index surged by the most in two years today as the government said the economy grew more than initially forecast in the first quarter. Gross domestic product in Japan expanded an annualized 4.1 percent, compared with a preliminary calculation of 3.5 percent, the Cabinet Office said.
Economic Reports

Reports this week may show U.S. retail sales climbed in May and business inventories increased in April, according to Bloomberg surveys of economists.
Shares of discount brokers are gaining the most since 2003 compared with the S&P 500, a sign that small investors are joining the four-year bull market even after U.S. stocks suffered their biggest losses in six months.
Charles Schwab Corp., TD Ameritrade Holding Corp. and E*Trade Financial Corp. have climbed 38 percent on average in 2013, beating the S&P 500 by 23 percentage points and eclipsing returns in financial shares from Goldman Sachs Group Inc. to Bank of America Corp., according to data compiled by Bloomberg. The last times that happened, equity mutual funds received about $91 billion, 24 percent more than the annual average in the two decades before the financial crisis, the data show.
Tesla Motors lost 2.2 percent to $99.81. Barron’s reported that shares will fall below $50 unless the electric-car maker slashes battery costs, cuts prices and justifies its growth outlook.
McDonald’s Sales

McDonald’s increased 1.6 percent to $99.83. The largest restaurant chain said sales at stores open at least 13 months rose 2.6 percent last month. Analysts projected a 1.9 percent increase, the average of estimates compiled by Consensus Metrix.
Monsanto rallied 4.4 percent to $106.14. Macquarie analyst Cooley May raised the recommendation on the St. Louis-based company to outperform from neutral on “overdone concerns” such as a fiscal third-quarter earnings warning, potential grain price declines in the second half of the year and adverse wheat findings in Oregon. The one-year price target was raised to $117 a share from $105.
Apple Inc. (AAPL) climbed 1.2 percent to $446.96. The company will introduce a new version of iOS with a simpler user interface at its developers conference in San Francisco today, according to people familiar with the plans. The company’s smartphones and tablet computers generate more than 70 percent of Apple’s sales.
Facebook Inc. (FB) gained 4 percent to $24.23 amid speculation that the world’s largest social network may be added to the S&P 500. With a current market value of almost $60 billion, Facebook is likely to join the S&P 500 in the next year, according toJordan Rohan, an analyst at Stifel Nicolaus & Co. He raised Facebook’s stock rating to buy from hold.
To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
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