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(Bloomberg) — The Standard & Poor’s 500 Index rose the most since Feb. 3, amid corporate deals and as investors weighed the timing of interest-rate increases after lower-than-forecast economic data. Health-care companies in the S&P 500 Index advanced 2.2 percent as Salix Pharmaceuticals Ltd. accepted a sweetened, $11.1 billion takeover offer from Valeant Pharmaceuticals International Inc. Life Time Fitness Inc. rose 5.2 percent after agreeing to be bought by private equity firms. The S&P 500 Index climbed 1.4 percent to 2,081.19 at 4 p.m. in New York, and moved back above its average price for the past 50 days. The Dow Jones Industrial Average added 228.11 points, or 1.3 percent, to 17,977.42. The Nasdaq Composite Index increased 1.2 percent. About 6.3 billion shares changed hands on U.S. exchanges, 8.3 percent below the three-month average. “People are thinking it’s not a given that the Fed is going to move toward raising rates any time soon,” Donald Selkin, the chief market strategist at New York-based National Securities, which oversees $3 billion, said by phone. “You’ve seen weaker reports and a drop in bond yields.”
The yield on 10-year Treasuries earlier fell as much as five basis points to 2.06 percent, the lowest in two weeks. The S&P 500 has lost 1.7 percent from a record on March 2, as a surging dollar stoked concern earnings growth will be lower than investors project. A gauge of the currency versus its major peers retreated, after posting four weeks of gains, before Fed officials start a two-day meeting Tuesday.

Central Banks

Speculation that a strengthening economy is pushing the central bank closer to an interest-rate increase has weighed on U.S. equities, making them among the worst performers in 24 developed markets this year. The Fed may remove the pledge to be “patient” with raising interest rates at this week’s meeting, according to predictions by firms including BNP Paribas SA. While the Fed is moving closer to raising rates, central banks in Europe and Asia are taking steps to bolster growth. Factory production in the U.S. declined in February for a third consecutive month, a sign cutbacks in manufacturing will hold back economic growth this quarter. An earlier report showed an index of manufacturing in the New York region fell in March. Confidence among U.S. homebuilders unexpectedly retreated this month to an eight-month low as prospective buyers were in little rush to shop for properties ahead of the busier spring selling season.

Volatility Returns

After six years of bull market amid Fed stimulus, volatility is back in U.S. stocks. The S&P 500, which never went more than three days without a gain in 2014, has twice posted five-day losing streaks this year. Daily equity moves exceeding 1 percent have jumped 50 percent from last year and shares slid 3 percent or more over four stretches in the first quarter. The Chicago Board Options Exchange Volatility Index slid 2.4 percent to 15.61. The gauge of S&P 500 options prices posted its second consecutive weekly gain March 13. Nine of 10 main industries in the S&P 500 advanced. Health- care soared 2.2 percent, and utilities rose 1.7 percent as yields on 10-year U.S. Treasuries fell to the lowest since Feb. 27. Industrial shares added more than 1.6 percent.
UnitedHealth Group Inc. and Merck & Co. jumped at least 1.6 percent, among the biggest gains in the Dow. Procter & Gamble Co. added 2.1 percent after people with knowledge of the matter said the company is exploring a sale or initial public offering of some of its beauty brands in a single deal.

Salix Deal

Salix climbed 2 percent. Valeant’s revised $173-a-share offer adds about $1 billion in cash for Salix stockholders. Valeant rose 2.5 percent. The sweetened deal led rival bidder Endo International Plc. to withdraw its offer of $175 a share in cash and stock. Endo increased 2.7 percent. Drugmakers developing a new generation of cholesterol treatments surged Monday after releasing data that showed the injections cut the rate of major cardiac events and death as they slashed bad cholesterol. Amgen Inc. rose 5.7 percent, the most since October. Sanofi and Regeneron Pharmaceuticals Inc. both climbed at least 3.3 percent, with Regeneron reaching a record. Life Time Fitness jumped 5.2 percent. The investor group, which also includes LNK Partners and Life Time’s chief executive officer, Bahram Akradi, will pay $72.10 a share in cash for the Chanhassen, Minnesota-based company, according to a statement Monday. The deal is one of the biggest buyouts of the year. Edwards Lifesciences Corp. soared 9.8 percent to a record. The company’s newer, thinner heart valve had lower death and stroke rates than the company’s older devices, a study found. The valve, Sapien 3, is already available in Europe, and Irvine, California-based Edwards has said it expects U.S. approval early next year.

Netflix Tumbles

Energy stocks climbed 1.4 percent, erasing an earlier 0.8 percent decline, led by gains of at least 2.9 percent in EOG Resources Inc. and Noble Energy Inc. Oil futures slumped to the lowest level since March 2009. Netflix Inc. lost 3.8 percent, the most in more than two months, after Evercore ISI analyst Ken Sena cut shares to sell from hold, citing increasing competition from existing and emerging content distributors. Raw-material companies were the only group to fall as DuPont Co. lost 4.3 percent, the most since October 2012. Bank of America Merrill Lynch analyst Kevin McCarthy cut shares to underperform from buy, in part citing the impact on results from a stronger dollar. Alcoa Inc. and Freeport-McMoran Inc. fell more than 0.9 percent.

–With assistance from Roxana Zega in Zurich.

To contact the reporter on this story: Callie Bost in New York at cbost2@bloomberg.net To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net John Shipman