U.S. stocks little changed as S&P 500 fails to exceed 2011 peak

U.S. stocks were little changed as optimism among European leaders about a Greek bailout failed to drive the Standard & Poor’s 500 Index above last year’s peak.

Banks had the biggest gain in the S&P 500 among 24 industries, rallying 1.4 percent. H.J. Heinz Co., the biggest ketchup maker, and Campbell Soup Co., the largest soup maker, climbed at least 2.9 percent as earnings beat projections. Gilead Sciences Inc. tumbled 15 percent as some patients relapsed on its hepatitis C drug. General Mills Inc., the maker of Cheerios cereal and Yoplait yogurt, slumped 4 percent after cutting its profit forecast amid weak demand.

The S&P 500 rose 0.1 percent to 1,359.11 at 12:56 p.m. New York time. The gauge is near its April peak of 1,363.61, which was the highest level since June 2008. The Dow Jones Industrial Average added 29.26 points, or 0.2 percent, to 12,933.34.

“The bar has been raised,” Eric Thorne, who helps oversee about $6 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a telephone interview. “The assumption made by investors is that the second bailout does happen. That concerns us a little bit. If things don’t go quite smoothly as expected, then the market would experience a fairly steep selloff in the near term.”

The S&P 500 has risen 8.1 percent so far this year as data on manufacturing, housing and jobs bolstered optimism in the world’s largest economy and European leaders stepped up efforts to contain the region’s debt crisis. Technology, financial and commodity companies, which are most-dependent on economic growth, had the biggest gains in 2012.

Germany Sees Deal

Global stocks rallied as Germany expressed confidence that euro-area governments will agree on a 130 billion-euro ($171 billion) rescue for Greece within days, while seeking to keep a bond swap of the nation’s debt on track. German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Greek Prime Minister Lucas Papademos discussed plans in a conference call today and are optimistic finance ministers will resolve remaining issues when they meet on Feb. 20.

“Greece is the word,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in a phone interview. “We’re just reacting to what the euro zone is telling us in terms of the state of negotiations. Do I believe that the euro zone will give Greece more money? Yes. Otherwise, Greece defaults.”

The KBW Bank Index of 24 stocks gained 0.9 percent. Wells Fargo & Co. added 1.9 percent to $30.96. JPMorgan Chase & Co. advanced 1 percent to $38.38. Bank of America Corp. lost 1.1 percent to $8.

Earnings Season

H.J. Heinz gained 4.8 percent to $54.59. The company reported third-quarter earnings excluding some items of 95 cents a share, beating the average analyst estimate of 85 cents.

Campbell Soup added 2.9 percent to $32.98. The company reported second-quarter earnings excluding some items of 64 cents a share. On average, the analysts surveyed by Bloomberg estimated profit of 62 cents.

First Solar Inc. rose 6.9 percent to $42.43. The biggest maker of thin-film solar panels resolved a permitting issue with Los Angeles County for a $1.36 billion power project under construction, paving the way for financing to resume.

Gilead tumbled 15 percent to $46.56. Among eight patients with hepatitis C genotype 1 in a clinical trial, six had a viral relapse within four weeks after stopping a 12-week treatment with the medicine, GS-7977, plus ribavirin, Gilead said today in a statement. The two other patients are two weeks out from stopping treatment, and haven’t relapsed, the company said.

Hurt Results

General Mills dropped 4 percent to $38.20. The company said “weak volume performance” across U.S. retail food categories in December and January hurt results in its fiscal third quarter.

The companies investors hated the most in 2011 have returned twice as much as the S&P 500 this year, burning speculators who bet stocks from Sears Holdings Corp. to Netflix Inc. would keep falling.

The 26 companies in the S&P 500 with the highest so-called short interest relative to shares available for trading rallied 18 percent this year, compared with 8 percent for the full index, data compiled by Bloomberg show. Speculators who borrowed Sears shares and sold them to profit from a drop got hammered as the stock surged 73 percent. Netflix, with short interest of 17 percent at the end of 2011, rose 76 percent.

“It’s been a rotation back into fundamentally sound, economically sensitive companies that had been unduly punished in the second half of last year,” David Spika, who helps oversee $13 billion as an investment strategist at Westwood Holdings Group Inc. in Dallas, said in a telephone interview. “When the market turns, those shorts have to be covered and that creates momentum.”