U.S. Stocks Gain, S&P 500 Jumps to Highest Level Since November

U.S. stocks rose, sending the Standard & Poor’s 500 Index to its highest level since November, as a gauge of future economic growth topped projections and speculation grew that CIT Group Inc. will avoid bankruptcy.
Caterpillar Inc. and Alcoa Inc. rallied at least 3.7 percent as the Conference Board’s gauge of the economic outlook increased for a third straight month. CIT Group jumped 79 percent as a person briefed on the board’s deliberations said the lender has reached a financing agreement with bondholders. Hasbro Inc. and Eaton Corp. gained at least 4.2 percent on earnings that beat analysts’ estimates.
The S&P 500 added 1.1 percent to 951.13 at 4:05 p.m. in New York, its best close since Nov. 5. The Dow Jones Industrial Average rallied 104.21 points, or 1.2 percent, to 8,848.15, erasing its loss for the year and closing at a six-month high. Europe’s Dow Jones Stoxx 600 Index climbed 1.2 percent and the MSCI Asia-Pacific Index increased 1.4 percent.
“Given the general weakness of the economy and concerns over corporate profitability going into the second quarter, reports to date have been a pleasant surprise,” said Dean Gulis, part of a group that manages .5 billion for Loomis Sayles & Co. in Bloomfield Hills, Michigan. “This week it’s going to continue to rally. The worm has turned a little bit. People are feeling better about the economy.”
Forecast Raised
All 10 industry groups in the S&P 500 rose today, led by consumer, commodity and industrial shares. Goldman Sachs boosted its forecast for the index, saying improving earnings will spur the steepest second-half rally since 1982. The bank raised its year-end target for the S&P 500 to 1,060, a 15 percent increase from strategist David Kostin’s projection of 940 on June 30.
Earnings topped analysts’ estimates by an average of 15 percent for S&P 500 companies that reported quarterly results since July 8, according to data compiled by Bloomberg, with 35 out of 43, or 81 percent, beating estimates. Analysts forecast profits fell an average 33 percent in the second quarter and will decrease 20 percent from July through September, according to data.
The S&P 500 jumped 7 percent last week as companies from Goldman Sachs Group Inc. to Intel Corp. and Johnson & Johnson reported results that topped analysts’ estimates. The benchmark index has rebounded 41 percent from its 12-year low on March 9 amid speculation the economy is recovering.
Stocks rallied today after the index of leading U.S. indicators reinforced signs the economy may be emerging from the worst recession in five decades. The Conference Board’s gauge of the outlook for the next three to six months increased 0.7 percent, more than forecast, and climbed three straight months for the first time since 2004.
Anticipating Cash Return
U.S. equities are rallying as the market anticipates cash coming back into equities, Laszlo Birinyi president of Birinyi Associates Inc., wrote in a note to clients today.
“We would argue that the most critical element was simply that we are in a bull market,” wrote Birinyi, who helps oversee 0 million for the Westport, Connecticut firm. “When one has an oversold market with liquidity, negative investors, and obvious and articulated concerns, the market will rally.”
Alcoa, the largest U.S. aluminum producer, rose 3.7 percent to .60, while Freeport-McMoRan Copper & Gold Inc., the biggest publicly traded copper producer, added 2.7 percent to .
Metals Rally
Copper prices rose to a nine-month high in New York on speculation that metals consumption will gain as the global economy recovers. Gold, silver, zinc and tin also led a rally in metals.
CIT Group surged 55 cents to .25. The 101-year-old commercial-finance company seeking to ward off bankruptcy agreed to a billion loan for 2.5 years from a group of its bondholders, according to people who declined to be identified because the negotiations are private. The New York-based lender needed to strike a deal with bondholders to reduce debt after the U.S. declined to give the firm a second bailout.
“Its importance for the small-business sector is dramatic,” Kevin Shacknofsky, who manages billion for Alpine Mutual Funds in Purchase, New York, said of CIT. “The rest of the financial industry sees the importance of CIT and they didn’t’ let it fail. That gives the market confidence.”
Caterpillar, the world’s largest maker of construction equipment, surged 7.8 percent to .65 after being upgraded to “buy” from “hold” by Bank of America Corp., which cited a bottom in the construction market.
Hasbro, Eaton Jump
Hasbro Inc., the world’s second-largest toymaker, gained 4.2 percent to .45 after second-quarter profit rose from sales of toys based on “Transformers” and “G.I. Joe.” Net income increased to .3 million, or 26 cents a share, from .5 million, or 25 cents, a year earlier. Analysts projected profit of 23 cents a share on average.
Eaton Corp., the maker of circuit breakers and fuel pumps, jumped 8.9 percent to .94 after posting second-quarter earnings, excluding some items, of 23 cents a share that beat the average analyst estimate in a Bloomberg survey by 50 percent.
Human Genome Sciences Inc., the producer of gene-based therapies, more than tripled to .51. GlaxoSmithKline Plc and Human Genome said their experimental lupus drug reduced patients’ symptoms in a yearlong study. U.S. shares of Glaxo, the U.K.’s largest drugmaker, gained 4 percent to .81. CBS Corp. jumped 10 percent to .43 after the owner of the most-watched TV network was raised to “overweight” at Morgan Stanley, which said investors may be drawn to its local advertising business in 2010.
Wynn, Halliburton
Wynn Resorts Ltd., the casino company founded by Stephen Wynn, surged 10 percent to .83 for the second-best advance in the S&P 500 after CIT. Las Vegas Sands Corp. said it plans to apply for an initial public offering of shares in its Macau casinos. Wynn reported 61 percent of its revenue from Macau in the most-recent quarter, according to Bloomberg data. Las Vegas Sands jumped 15 percent to .86.
Halliburton Co. the world’s second-largest oilfield- services provider, gained 4.4 percent to .33 after posting second-quarter earnings, excluding some items, of 30 cents a share to surpass the average analyst estimate in a Bloomberg survey by 13 percent.
The cheapest valuations in at least 14 years are making energy companies too alluring to pass up for UBS AG and Guggenheim Partners LLC, even though earnings in the industry may fall 48 percent this year. Oil and gas producers in the MSCI World Index traded at .84 per dollar of profit this month, less than half the average of .10 in the gauge of developed markets and the widest gap since at least 1995, data compiled by Bloomberg show.
Bank of America, Tyson Slump
Bank of America lost 5 percent to .24 after FBR Capital Markets said the largest U.S. lender by assets may post further losses in the second half as the job market deteriorates. The lender was also downgraded to “in-line” from “outperform” at Fox-Pitt Kelton Cochran Caronia Waller. Tyson Foods Inc. sank 9.3 percent to .47. The largest meat producer was downgraded to “hold” from “buy” at Deutsche Bank and cut to “market perform” from “outperform” by BMO Capital Markets.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/07/us-stocks-gain-s-500-jumps-to-highest.html

U.S. Stocks Advance on Caterpillar Earnings, Bernanke Remarks

U.S. stocks rose, extending the Dow Jones Industrial Average’s longest rally in two years, as Caterpillar Inc.’s earnings tripled analyst estimates and Federal Reserve Chairman Ben S. Bernanke said there are signs the economy is stabilizing.
Caterpillar, the biggest maker of bulldozers, jumped 7.7 percent to lead the Dow to a seventh straight gain. Merck & Co. added 6.1 percent as job cuts helped it post better-than- estimated earnings. Banks slid, limiting the market’s advance, after CIT Group Inc. said it may need to file for bankruptcy if a plan to repurchase debt fails and Regions Financial Corp. and Zions Bancorporation posted quarterly losses on bad loans.
The Standard & Poor’s 500 Index added 0.4 percent to 954.58 at 4:05 p.m. in New York, maintaining its highest level in more than eight months. The Dow Jones Industrial Average rallied 67.79 points, or 0.8 percent, to 8,915.94 to extend its gain since July 10 to 9.4 percent. The MSCI World Index increased 0.9 percent to the highest level since Nov. 4.
“Beating expectations shows they are in slightly better shape than most investors thought,” said Eric Thorne, who helps oversee .5 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pa. “The fact that numbers are slightly above estimates is a sign to us that we are in the beginning stages of an economic recovery.”
Earnings Top Estimates
Per-share earnings beat analysts’ projections by an average of 14 percent for the 70 companies in the S&P 500 that reported quarterly results since July 8, according to data compiled by Bloomberg. Analysts forecast profits fell an average 33 percent in the second quarter and will decrease 20 percent from July through September, according to Bloomberg data.
The S&P 500 rallied 1.1 percent yesterday as a gauge of future economic growth topped projections. The benchmark for U.S. equities advanced 7 percent last week as companies from Goldman Sachs Group Inc. to Intel Corp. reported results that topped estimates.
Treasuries climbed the most in almost two weeks today, sending the 10-year note yield down 13 basis points to 3.48 percent, as Bernanke said “limited inflation pressures” will allow policy makers to keep interest rates near zero for an “extended period.” Bernanke, in his semi-annual testimony before the House Financial Services Committee, also said the economy is showing “tentative signs of stabilization.”
Caterpillar Rallies
Caterpillar, the world’s largest maker of bulldozers and excavators, rallied 7.7 percent to .46 after government stimulus programs and improved credit markets helped stabilize demand for the world’s largest maker of bulldozers and excavators. Profit excluding some costs was 72 cents a share, surpassing the 22-cent average estimate of 20 analysts surveyed by Bloomberg. The company also raised its full-year forecast. Merck rose 6.1 percent to .65 after the drugmaker that is buying rival Schering-Plough Corp. said second-quarter earnings were 83 cents a share, surpassing the 77-cent average estimate of analysts.
Exxon Mobil Corp., the largest U.S. oil company, added 2.2 percent to .47 as oil futures erased an earlier loss and gained 1.2 percent to .72 a barrel in New York. Chevron Corp., the second-largest U.S. oil producer, added 61 cents .25.
International Paper Co. gained 6.4 percent to .55, the highest price since Oct. 29, after the largest U.S. maker of cardboard shipping boxes was raised to “buy” from “hold” at Deutsche Bank AG, which said containerboard pricing was stable in June.
New York Times Co. advanced 5.6 percent to .42 after the Boston Globe’s largest union approved a contract for million in annual cuts in a decision that may reduce losses at the newspaper and help its owner negotiate a sale.
Credit Suisse Says to Buy
Credit Suisse Group AG today advised investors to buy equities and trim their holdings of government bonds, reversing a recommendation from June. The bank raised its estimate for the S&P 500 by 14 percent to 1,050 by the end of the year, citing improving economic indicators and earnings. Goldman Sachs yesterday boosted its year-end estimate for the measure to 1,060, implying a 15 percent surge between June 30 and Dec. 31. That would be the steepest second-half rally since 1982.
The S&P 500 has rallied 41 percent from a 12-year low on March 9 amid speculation the economy and companies are recovering from the worst recession in more than half a century and the longest slump in quarterly earnings on record.
More Gains Predicted
U.S. stocks will likely continue to advance, according to John Murphy, chief technical analyst at StockCharts.com. The S&P 500 rose to a new high for the year today on an intraday basis, touching 956.53. Since the index exceeded 956, it’s likely to advance to about 1,000, for a gain of 50 percent from the 12- year intraday low of 666.79 on March 6, Murphy said.
Indications that the S&P 500’s run is likely to continue include the performance of the cumulative advance-decline line for securities listed on the New York Stock Exchange, Murphy said. The index, which tallies the number of daily gains for individual securities minus the number of declines since its August 1996 inception, rose 4.2 percent to a 10-month high of 39,961 yesterday.
“Most people missed the lows and continue to treat this as a rally in a bear market,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which manages 2 billion. “Hey folks, every bull market that I’ve seen began being called a short-term rally in a bear market.”
CIT Slumps
CIT, the 101-year-old commercial lender, fell 22 percent to 98 cents after saying its “existing liquidity” isn’t enough to repay billion of floating-rate notes maturing on Aug. 17. The lender, which announced a billion rescue financing from its bondholders yesterday, has asked holders of the August notes to swap their claims for 82.5 cents on the dollar.
A gauge of financial shares was the largest drag on the S&P 500 among 10 industry groups as Regions dropped 15 percent to .42, Zions declined 13 percent to .68 and Comerica Inc. lost 10 percent .51.
Lexmark International Inc. had the second-biggest drop in the S&P 500 after CIT, losing 20 percent to .08, after the second-largest U.S. printer maker said third-quarter profit may be as low as 40 cents a share, below the 52-cent average of analyst estimates compiled by news.
Lockheed Martin Corp., the world’s largest defense company, lost 8.5 percent to .13 after the company posted its largest profit drop in more than five years and the U.S. Senate voted to end funds for its F-22 jet.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/07/us-stocks-advance-on-caterpillar.html

U.S. Stocks Advance for Third Week as Earnings Beat Estimates

U.S. stocks rose for a third week, completing the Dow Jones Industrial Average’s best month since 2002, as companies from Motorola Inc. to MasterCard Inc. topped analysts’ profit estimates.
Amgen Inc., the world’s largest biotechnology company, and Dow Chemical Co., the largest U.S. chemical maker, gained after earnings beat projections. General Electric Co. surged 11 percent on speculation new banking rules will allow it to keep its finance unit. Yahoo! Inc. slumped after terms of an Internet-search accord with Microsoft Corp. were less favorable than analysts predicted.
“What’s been driving the market is the idea that maybe this recession isn’t going to be as severe or prolonged as we thought,” said Samuel Stewart, president of Wasatch Funds, which manages billion in Salt Lake City. “The market is now behaving as though the credit crisis was a blip on the radar.”
The S&P 500 rose 0.8 percent to 987.48, the highest since Nov. 4, capping its fifth straight monthly advance. The main benchmark for American equity has rebounded 46 percent from a 12-year low on March 9. The Dow Jones Industrial Average rose 78.37 points, or 0.9 percent, to 9,171.61, extending its monthly advance to 8.6 percent, the biggest since October 2002. The Russell 2000 Index of small companies added 1.5 percent to 556.71.
Earnings Top Estimates
About three-quarters of the 148 companies in the S&P 500 that released second-quarter results this week topped estimates, according to data compiled by Bloomberg. Companies slated to report next week include Kraft Foods Inc., Procter & Gamble Co. and Cisco Systems Inc.
Companies in the S&P 500 are still headed for a record eighth consecutive decline in quarterly profits. Per-share earnings have tumbled 32 percent for the 352 companies in the S&P 500 that have reported results since June 17. Analyst estimates compiled by call for a 31 percent drop in the second quarter and a 22 percent third-quarter decline. While earnings are falling, results have topped projections by an average 10 percent.
“There is a broader sense that the decline is over,” said Stephen Lieber, chief investment officer of Alpine Mutual Funds in Purchase, New York, which manages billion. “Corporate earnings in the last week have been singular in importance.”
Motorola climbed 8.8 percent to .16. The biggest U.S. mobile-phone maker posted a narrower second-quarter loss than analysts projected, helped by job cuts and a recovery in handset shipments.
MasterCard Climbs
MasterCard rose 4.6 percent to 4.03. The world’s second- biggest payment-card network reported earnings excluding some items of .68 a share, 11 percent higher than the average analyst estimate. MasterCard raised fees, slashed expenses and processed more transactions during the quarter.
Amgen added 2.3 percent to .31. The world’s largest biotechnology company raised its full-year earnings forecast after second-quarter profit excluding some items beat the average analyst estimate by 11 percent. Amgen cut research costs and increased sales of its arthritis drug Enbrel.
Dow Chemical advanced 4.9 percent to .17. The largest U.S. chemical maker posted an unexpected second-quarter profit as demand for its products stabilized. The average analyst estimate was for a loss.
GE Gains
General Electric, the world’s biggest non-bank financial company, advanced 11 percent to .40. U.S. Representative Barney Frank said manufacturers that already own finance businesses should be allowed under revised banking rules to retain them without being subject to Federal Reserve oversight of their manufacturing operations. Frank heads the U.S. House Financial Services Committee.
Financial stocks in the S&P 500 climbed 4.4 percent, the steepest among 10 industries. Old National Bancorp, an Indiana- based financial-service company, reported second-quarter profit excluding some items that was more than four times the average analyst estimate, sparking a rally in regional banks.
Marshall & Ilsley Corp., Wisconsin’s largest lender, led gains, surging 26 percent to .04. Old National climbed 15 percent to .30 and Zions Bancorp., the Utah lender that operates in 10 Western states, rose 21 percent to .58.
Yahoo fell 18 percent to .32. The owner of the second- most popular U.S. Internet search engine will use Microsoft’s search engine on its Web sites and sell ads that appear next to search results. The agreement with Microsoft, the world’s largest software maker, didn’t include an upfront payment for Yahoo, which some analysts had estimated could be as much as billion.
Recession Saps Demand
Exxon Mobil Corp. led energy companies to the second- biggest decline among the S&P 500’s 10 main industry groups. The world’s largest energy company fell 2.6 percent to .39 after reporting its lowest profit in more than five years as the recession sapped fuel demand.
Masco Corp. rose 26 percent to .93 for the biggest gain in the S&P 500. The insulation installer forecast a loss this year of as little as 5 cents a share, compared with the average analyst loss estimate of 26 cents.
Akamai Technologies Inc. fell 22 percent to .44 for the biggest drop in the S&P 500. The provider of software that makes Web sites load faster reported profit excluding some items of 40 cents a share in the second quarter, missing the average analyst estimate by 1.5 percent.
Reports next week will probably show employers cut jobs at a slower pace in July and the factory slump eased, according to economists’ forecasts, suggesting the recession is ending.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/08/us-stocks-advance-for-third-week-as.html

U.S. Stocks Climb, Pushing Dow Average to Highest Close of 2009

U.S. stocks gained, sending the Dow Jones Industrial Average above its highest close in a year, after Alcoa Inc. unexpectedly reported a profit and economic data signaled the U.S. recession is ending.
Alcoa jumped 11 percent, the most since June, after the largest U.S. aluminum producer cut jobs and raw-material costs faster than analysts projected. Newmont Mining Corp. and Freeport-McMoRan Copper & Gold Inc. rallied more than 10 percent on record gold prices. Macy’s Inc., the second-biggest department-store chain, soared 10 percent as U.S. retailers said same-store sales rose for the first time in 13 months.
“If we can get the retail numbers to keep going up, then the stock market will go up,” said Jerome Dodson, who oversees .5 billion at Parnassus Investments in San Francisco. “By the end of the year, I expect the market to be somewhat higher than we are today.”
The Standard & Poor’s 500 Index climbed 4.5 percent to 1,071.49 for the biggest weekly advance in three months. The Dow average rose 377.27 points, or 4 percent, to 9,864.94. The Nasdaq Composite Index added 4.5 percent to 2,139.28.
Equities advanced as economic data showed first-time jobless claims slid to the lowest level since January and the U.S. service industries grew after 11 months of contraction. The S&P 500, up 58 percent in the past seven months, posted the first five-day rally for a week since November 2006.
Rising P/E’s
The gains have driven the index’s valuation to 20.3 times reported operating income for its companies, the most since 2004. The VIX, as the Chicago Board Options Exchange Volati Index is known, tumbled 19 percent to 23.12 for the steepest weekly decline since November. The index measures the cost of using options as insurance against S&P 500 declines.
The number of Americans filing first-time claims for unemployment benefits slid to 521,000 in the week ended Oct. 3, Labor Department data showed. That was below the median estimate for 540,000 claims from a Bloomberg survey of economists. The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the economy, rose to 50.9, above the line between expansion and contraction.
Alcoa rose to .24, the highest price since October. The company reported a profit of 4 cents a share, exceeding the average analysts’ estimate for a 9-cent loss.
Newmont, the largest U.S. gold producer, advanced to .50. Freeport-McMoRan, which operates the world’s biggest gold mine, climbed 13 percent to .34.
Gold Gain
Gold, which has climbed for seven of the past eight weeks, reached a record ,062.70 on Oct. 8. Australia’s monetary- policy makers unexpectedly raised borrowing costs this week, triggering a decline in the dollar and a rally in bullion prices.
The Dollar Index, which tracks the currency against the yen, euro, Swiss franc, pound, Swedish krona and Canadian dollar, slid 0.9 percent to 76.35 for the week.
The Federal Reserve will be prepared to tighten monetary policy when the outlook for the economy “has improved sufficiently,” Chairman Ben S. Bernanke said at a Board of Governors conference in Washington on Oct. 8.
“Accommodative policies will likely be warranted for an extended period,” Bernanke said. “At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem.”
Macy’s rose to .15. Limited Brands Inc., which owns the Victoria’s Secret stores, soared 13 percent to .26.
Same Store
Data from Retail Metrics Inc. showed sales at U.S. chain stores open at least a year climbed 1.1 percent last month as discounts drew shoppers. Seventy percent of retailers reported sales results that exceeded the average of estimates compiled by the Swampscott, Massachusetts-based research firm.
“Even though the market has had a very big move off the bottom, there are still a lot of stocks out there that aren’t fully valued,” said Matthew Kaufler, who helps oversee billion at Federated Clover Investment Advisors in Rochester, New York, in a Bloomberg Television interview.
Johnson & Johnson, Goldman Sachs Group Inc. and Google Inc. are among the 31 companies in the S&P 500 scheduled to release quarterly results next week. The index is projected to post a ninth straight period of declining profits, the longest streak since the Great Depression, before returning to growth in the final three months of the year, analysts’ estimates show.
Retail sales in the U.S. probably fell in September as dealer showrooms emptied out following the expiration of “cash for clunkers,” economists said before a report next week.