Bloomberg News

U.S. Stocks Rise as Earnings Top Forecasts, Jobless Claims Fall

April 25, 2013

U.S. stocks rose, extending a rally in the Standard & Poor’s 500 Index to a fifth day, as earnings from United Parcel Services Inc. to Cliffs Natural Resources Inc. topped estimates and jobless claims fell.

Cliffs Natural soared 15 percent and UPS climbed 2.3 percent. Akamai (AKAM:US) Technologies Inc. rose 18 percent as revenue and profit beat estimates. 3M Co. (MMM:US) slid 2.8 percent as profit trailed forecasts and the company cut its full-year outlook amid a slowing global economy. Qualcomm Inc. lost 5.4 percent after forecasting profit that may miss some analysts’ projections.

The S&P 500 (SPX) advanced 0.4 percent to 1,585.16 in New York. The gauge has risen 2.8 percent since April 18. The Dow Jones Industrial Average climbed 24.50 points, or 0.2 percent, to 14,700.80 today. Almost 6.8 billion shares traded hands today, or 6 percent more than the three-month average.

“The majority of companies are continuing to beat expectations, so that’s a good sign,” Peter Jankovskis, who helps oversee $3 billion as co-chief investment officer of Lisle, Illinois-based Oakbrook Investments LLC, said by telephone. “The jobless claims were better-than-expected, so that’s providing some support.”

Some 59 S&P 500 companies post earnings today. Of the 237 index members that have published results so far in this reporting season, 73 percent have exceeded analysts’ earnings estimates while 56 percent missed on revenue, data compiled by Bloomberg show.

Profit at S&P 500 companies dropped 1.1 percent in the first three months of the year, according to analyst forecasts compiled by Bloomberg. That would mark the first year-over-year decrease since 2009.

Jobless Claims

Applications for jobless benefits fell by 16,000 to 339,000 in the week ended April 20, according to Labor Department data released today in Washington. Economists in a Bloomberg survey had a median estimate of 350,000 claims.

In the U.K., the economy grew 0.3 percent in the first quarter, more than economists forecast, avoiding a triple-dip recession. Twenty-four of 40 economists surveyed by Bloomberg expect the European Central Bank to cut its benchmark interest rate by a quarter percentage point to 0.5 percent next week.

The S&P 500 has surged 134 percent from a 12-year low in 2009 as corporate earnings beat analyst estimates and the Federal Reserve embarked on three rounds of bond purchases to spur economic growth. The benchmark gauge is within eight points of an all-time high of 1,593.37 reached on April 11.

Debate Shifting

Central bank policy makers have been voicing support for extending record stimulus as inflation cools and 11.7 million Americans remain jobless. That marks a shift from last month’s meeting, when the bankers debated the timing of a possible reduction in bond buying. The Federal Open Market Committee will meet April 30-May 1.

“The market is really looking at continued easing by the Fed,” Greg Woodard, a portfolio strategist at Manning & Napier in Fairport, New York, said by phone. His firm had $45.2 billion under management at the end of 2012. “They’re looking for signals of when the Fed is going to start to reverse that. Our view is that probably it’s going to be some time away.”

The Chicago Board Options Exchange Volatility Index (VIX), or VIX, increased 0.1 percent to 13.62. The CBOE opened for trading three-and-a-half hours late today after a problem with its computer systems shut the derivatives market.

Nine out of 10 industries in the S&P 500 advanced as phone and raw-materials companies climbed the most, rising at least 1 percent. Energy companies slumped 0.2 percent as a group.

Cliffs Natural

Cliffs Natural jumped the most in four years, adding 15 percent to $20.95. The largest U.S. iron-ore producer idled some mines to reduce operating costs in the first quarter and adjusted earnings beat analysts’ forecasts.

UPS climbed 2.3 percent to $85.42. The world’s largest package-delivery company posted higher first-quarter earnings than analysts estimated as deliveries of online purchases increased. The company handles more than 16 million packages and envelopes a day worldwide, making it a bellwether for the economy.

Akamai, which helps customers deliver online content faster, had the biggest gain in the S&P 500. The stock surged 18 percent to $42.48 after the company reported first-quarter revenue and profit that topped estimates as Internet traffic increased more than expected.

An index of homebuilders climbed 2.5 percent as all of its 11 members gained. PulteGroup Inc. jumped 5.6 percent to $20.79. The largest U.S. homebuilder by revenue reported earnings that beat analyst estimates as an accelerating housing recovery fueled sales and led to higher prices.

Dow Chemical

Dow Chemical (DOW:US) Co. advanced 5.6 percent to $33.97. The largest U.S. chemical maker by sales posted first-quarter profit that beat analysts’ estimates as lower prices for natural gas increased earnings from plastics.

Biogen Idec Inc. added 4.8 percent to $216. The fourth- largest U.S. biotechnology company by market value raised its full-year forecast as first-quarter net income increased on a tax benefit.

Regeneron (REGN:US) Pharmaceuticals Inc. advanced 2.9 percent to $216.75. The maker of the eye medicine Eylea will replace MetroPCS Communications Inc. in the S&P 500 after the close of trading on April 30, S&P said.

3M fell 2.8 percent, the steepest decline since October, to $104.88. The maker of products ranging from Scotch tape to dental braces reduced its annual earnings forecast after quarterly profit trailed (MMM:US) estimates for the first time in 1 1/2 years amid a slowing global economy. The company, which made 65 percent of 2012 revenue outside the U.S., gets fewer dollars when converting sales from countries with weaker currencies into its results.

Qualcomm, Exxon

Qualcomm (QCOM:US) lost 5.4 percent to $62.44. The biggest seller of semiconductors for mobile phones forecast fiscal third-quarter net income of 80 cents to 88 cents a share as average phone prices come under pressure. Analysts on average had projected earnings of 87 cents, according to data compiled by Bloomberg.

Exxon Mobil Corp. slipped 1.5 percent to $88.07, halting a five-day gain of 3.9 percent. The world’s largest company by market value said sales fell 12 percent to $108.8 billion in the first quarter. Widening chemical margins made up for lower crude production and prices, helping Exxon post an unexpected profit increase.

Intuit (INTU:US) Inc. slid 11 percent to $57.09. The maker of tax and financial-planning software cut its full-year earnings forecast. JPMorgan Chase & Co. downgraded the shares to neutral from overweight, the equivalent of a buy rating.

Safeway Inc. tumbled 14 percent, the most since 2003, to $24.32 after the grocer reported first-quarter same-store sales that were lower than it previously estimated.

Zynga Inc. sank 6.5 percent to $3.13. The biggest maker of online social games forecast second-quarter sales that may fall short of some analysts’ estimates as revenue from mobile titles fails to make up for a drop in users playing its games on Facebook Inc.’s website.

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • AKAM
    (Akamai Technologies Inc)
    • $55.28 USD
    • 0.75
    • 1.36%
  • MMM
    (3M Co)
    • $148.59 USD
    • 3.54
    • 2.38%
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