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Business Title: S&P 500 Rises to Highest Since May 2008 The Standard & Poor’s 500 Index (SPX) advanced to the highest level in almost four years as Apple Inc. plans to pay a dividend and buy back $10 billion of its stock. Financial, commodity and technology shares had the biggest gains in the S&P 500 among 10 groups. Apple rose 2.1 percent to a record. Bank of America Corp. (BAC) and U.S. Steel Corp. climbed at least 1.8 percent. Citigroup Inc. (C) jumped 4.4 percent after selling its 2.71 percent stake in Shanghai Pudong Development Bank to institutional investors. United Parcel Service Inc. (UPS) increased 3.4 percent after agreeing to buy TNT Express NV The S&P 500 rose 0.5 percent to 1,410.42 at 12:23 p.m. New York time. The benchmark measure rose to the highest level since May 2008 and traded 9.9 percent below its all-time high of 1,565.15 in October 2007. The Dow Jones Industrial Average advanced 14.99 points, or 0.1 percent, to 13,247.61 today. “There’s plenty of room for dividends to increase,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said in a telephone interview. His firm oversees $160 billion. “Paying dividends is a sign of health in the companies and the economy. That plays well in terms of investors’ confidence.” The S&P 500 has risen 12 percent in 2012 amid better-than- estimated economic and corporate reports and expectations Europe would tame its debt crisis. The measure is on pace for the best first quarter since 1998. It trades at 14.6 times reported earnings, the highest valuation level since July while still below the average since 1954 of 16.4 times earnings. Today’s rally after Apple (AAPL)’s announcement added to last week’s optimism over dividend increases by banks including JPMorgan Chase & Co. The index capped a five week rally on March 16, climbing 5 percent since February 10. “It’s all about confidence,” James Paulsen, who helps oversee about $333 billion as chief investment strategist at Minneapolis-based Wells Capital Management, said in a telephone interview. “You’re seeing more evidence of corporate confidence rising to the extent that companies are starting to act on that. You had the Apple announcement on a dividend today and banks announcing dividend hikes last week. The environment for the next few years still looks very good for equity investors.” Apple gained 2.1 percent to $597.85 today. Investors will receive a quarterly dividend of $2.65 a share starting in the period beginning July 1, Cupertino, California-based Apple said in a statement. The buybacks will begin in the fiscal year starting Sept. 30 and will take place over three years, the company said. Apple’s cash pile has swelled amid surging demand for its products, such as the iPhone and iPad. Investors had urged Apple to return some of the balance in the form a dividend. Chief Executive Officer Tim Cook fueled speculation an announcement might be coming when he said this year that Apple had “more than we need to run a company,” and that the board was considering its options. “We are extremely confident in our future and see tremendous opportunities ahead,” Apple Chief Financial Officer Peter Oppenheimer said in the release. He said the company plans to pay out about $45 billion over three years. The KBW Bank Index added 1.6 percent as 22 of its 24 stocks advanced. Bank of America increased 1.8 percent, the biggest gain in the Dow, to $9.98. The shares have surged 25 percent in five days, the most since Aug. 30. Citigroup jumped 4.4 percent to $38.31. The third-largest U.S. bank sold its 2.71 percent stake in Shanghai Pudong Development Bank to institutional investors, generating after- tax proceeds of about $349 million. U.S. Steel (X) rose the most in the S&P 500, gaining 7 percent to $31.83. The country’s largest producer of the metal by volume should benefit from a recovery in steel prices, UBS AG said in a note. UPS added 3.4 percent to $81.08. The company raised its offer for TNT Express NV by 5.6 percent to 5.16 billion euros ($6.8 billion) to secure the biggest deal in the U.S. company’s 105-year history. E*Trade Financial Corp. (ETFC) jumped 3 percent to $11.37. The online brokerage was raised to the equivalent of a buy at Wells Fargo & Co. Sprint Nextel Corp. (S) slumped 4.5 percent to $2.76. Sanford C. Bernstein & Co. downgraded the company amid concern it won’t sell enough iPhones to afford its “punishing” commitment with Apple Inc. Medco Health Solutions Inc. (MHS) lost 1.4 percent to $69.31. Express Scripts Inc. (ESRX)’s bid to acquire the company may be delayed by a lawsuit being considered by five states. Express Scripts fell 1.7 percent to $53.44. Daily price changes in the S&P 500 are decreasing the most in eight decades, shrinking to the smallest since 1995 when investors abandoned stocks just before the biggest rally ever. The benchmark gauge for U.S. equities has gained or lost an average 0.46 percent a day this year, compared with 1.04 percent in 2011, the biggest reduction since 1934, during the Great Depression, according to data compiled by Bloomberg. Swings are diminishing after valuations fell 40 percent and correlation among shares weakened the most in at least three decades. At the same time, trading on the New York Stock Exchange has slumped to the lowest rate in 13 years, spurring concern about the biggest first-quarter rally since 1998. Bulls say the decline in trading and daily swings signal fear is dissipating after one of the most volatile years on record. Bears say falling volume is a warning gains will reverse should economic reports and earnings fail to match expectations. “Low volatility is good in that it will bring investors back,” Tim Hoyle, the director of research at Radnor, Pennsylvania-based Haverford Trust Co., which manages $6 billion, said in a March 13 phone interview. “Even though bullish sentiment is high, people are still fearful. I see it in my business every day, they couldn’t stomach the volatility. This will restore some sense.”
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