U.S. Stocks Rise as Europe Policy Makers Weigh Options

By Sarah Pringle & Namitha Jagadeesh

U.S. stocks rose, snapping a three- day decline in the Standard & Poor’s 500 Index, as euro-area leaders weighed options for Cyprus and investors awaited the Federal Reserve’s monetary policy decision.

The S&P 500 (SPX) added 0.6 percent to 1,557.18 at 9:31 a.m. in New York. “Europe has taken the Cyprus rejection of the terms of the EU bailout in stride,” Peter Jankovskis, the chief investment officer at Lisle, Illinois-based Oakbrook Investments LLC, said in a phone interview. His firm oversees $3.3 billion. “Most of the European markets are up, and that’s basically what things are reacting to.”

The S&P 500 fell 0.2 percent yesterday as the parliament in Cyprus rejected a bank levy needed for a bailout for the Mediterranean nation. Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene to come up with a new rescue package for Cyprus. The European Central Bank, whose Governing Council meets today in Frankfurt, will also have to decide whether to give Cyprus more time or consider cutting off resources to the country’s banks.

In the U.S., the Fed will probably start reducing its $85 billion of monthly bond buying no earlier than the fourth quarter of 2013, according to median estimates by economists surveyed March 13-18 before a two-day meeting of policy makers ending today. The Fed will likely halt quantitative easing entirely in the first half of next year after expanding central bank assets to a record of about $4 trillion, they forecast.

The S&P 500 has surged 129 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Fed embarked on three rounds of bond purchases to stimulate the economy. The benchmark index rose to within two points of its 2007 record last week while the Dow reached an all-time high.

To contact the reporters on this story: Sarah Pringle in New York at springle1@bloomberg.net; Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net

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