U.S. stocks rose, briefly sending the Standard & Poor?s 500 Index (SPX) to a record, after health-care shares jumped on a smaller-than-forecast cut in Medicare rates and EBay Inc. climbed as Carl Icahn urged the spinoff of PayPal.
Humana rallied 11 percent for the biggest gain in the S& P 500 after saying the rate cut in 2015 for Medicare Advantage patients will be less than an earlier estimate. EBay climbed 3.1 percent as Icahn criticized the online marketplace for ?lapses? in corporate governance and asked shareholders to vote in favor of the split. Oil producers led gains among 10 main industries in the S& P 500 with a 1.5 percent advance as crude prices traded above $100 a barrel.
The S& P 500 increased 0.6 percent to 1,847.61 at 4 p.m. in New York. Earlier, it reached 1,858.71 to surpass the previous closing high from Jan. 15. The U.S. equity benchmark is little changed for the year. The Dow Jones Industrial Average added 103.84 points, or 0.6 percent, to 16,207.14 today.
?We?re just seeing a shift in mentality,? Mark Freeman, who oversees about $18.9 billion as chief investment officer at Westwood Holdings Group Inc. in Dallas, said by phone. ?The market is really willing to focus on the positives and dismiss the negatives. In that environment, the market tends to drift higher.?
Investors are returning to U.S. stocks after withdrawing $35.8 billion from equity exchange-traded funds in the first six weeks of the year, data compiled by Bloomberg show. The ETFs have since taken in almost $18 billion. Deposits reached a record $139 billion in 2013 as the S& P 500 jumped 30 percent for the best annual gain since 1997.
Stocks Rally
The S& P 500 has rebounded 6.1 percent since Feb. 3, following losses spurred by investor concern about continued cuts in the Fed?s monthly asset purchases and a rout in emerging markets.
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., cited a farm he?s owned since 1986 to caution individuals against frequent buying and selling of stocks. Investors should treat their equity holdings like real estate purchases, focusing on the potential for profits over time rather than short-term price fluctuations, Buffett, 83, wrote in an excerpt from his annual letter published on the website of Fortune magazine today.
Liquidity Curse
?Those people who can sit quietly for decades when they own a farm or apartment house too often become frenetic when they are exposed to a stream of stock quotations,? Buffett said. ?For these investors, liquidity is transformed from the unqualified benefit it should be to a curse.?
Fed Chair Janet Yellen said this month that the economy has strengthened enough to withstand stimulus cuts, adding that only a notable change to the outlook would prompt the central bank to slow the pace of tapering. Yellen, in her first global forum as Fed chair, won praise at the Group of 20 nations meeting over the weekend for helping smooth emerging-market concerns as the U.S. tapers monetary stimulus.
Three rounds of stimulus have helped push the S& P 500 173 percent higher from a 12-year low in 2009. The bull market, approaching its sixth year in March, is less than a month away from taking out the 1982-1987 period as the sixth longest of all time, according to Bespoke Investment Group.
Real Economy
?U.S. equities can go higher in 2014,? Drew Wilson, an investment analyst with Fenimore Asset Management in Cobleskill, New York, said in a phone interview. The firm oversees about $1.7 billion. ?Taper is not going to affect the real economy. I don?t know what it?ll do psychologically. I believe the fundamental recovery is real and will be strong enough to overcome the psychology.?
Investors have dismissed worse-than-forecast U.S. economic data over the past two weeks, speculating that severe winter weather explains the weakness in reports such as housing and hiring. The Bloomberg ECO U.S. Surprise Index, which measures how much recent data has beaten or missed economists? estimates, fell to minus 0.429 on Feb. 21, the lowest since August 2011.
The Commerce Department publishes its revised estimate for fourth-quarter growth on Feb. 28. The report will probably show that gross domestic product expanded 2.5 percent at an annualized pace, less than the government had forecast, according to a Bloomberg survey of economists.
The Chicago Board Options Exchange Volatility Index (VIX) dropped for a third day, sliding 3.1 percent today to 14.23. The gauge of S& P 500 options known as the VIX is up 3.7 percent this year.
European markets ended higher, while most Asian markets moved lower.
The G20 -- the world's 19 richest nations and the European Union -- pledged to install policies that will add $2 trillion to the world economy over the next five years. The group committed to " significantly raise global growth," according to a statement following a weekend meeting in Australia.
