Markets & Finance

U.S. Stocks Gain as Tech Rallies


Indexes Friday received a boost from better-than-expected earnings at Oracle and Research in Motion

By Elizabeth Stanton

Dec. 18 (Bloomberg) -- U.S. stocks rose, trimming a weekly loss for the Standard & Poor's 500 Index, after better-than- estimated profit at Oracle Corp. (ORCL) and Research In Motion Ltd. (RIMM) boosted technology companies.

Oracle, the world's second-biggest software maker, rallied 6.4 percent to an almost nine-year high after saying customers are once again spending on technology. Research In Motion jumped 10 percent as demand for its Curve phone helped bolster its sales and profit projections. PepsiCo Inc. (PEP) and Philip Morris International Inc. (PM) led consumer-staples shares to the steepest drop among 10 industries, limiting the market's advance.

The S&P 500, which is up 22 percent in 2009 after its worst year since the Great Depression, added 0.6 percent to 1,102.39 at 4:09 p.m. in New York. The Dow Jones Industrial Average increased 20.63 points, or 0.2 percent, to 10,328.89. The The Nasdaq Composite Index climbed 1.1 percent to 2,203.36. For the week, the S&P 500 fell 0.4 percent, while the Dow average lost 1.4 percent.

"Corporate earnings in general have been very good but it's been very cost-driven," said David Chalupnik, who oversees $8 billion as head of equities at First American Funds in Minneapolis. "Oracle provided a positive tone to the revenue outlook."

For a fifth straight week the S&P 500 was unable to top the 1,120 level that marks the midpoint of its 57 percent plunge from a record in October 2007 to a 12-year low in March 2009. A rebound of as much as 65 percent from the low has prompted many investors to sell shares to book profits, limiting additional gains, Chalupnik said.

Tech Rally

Oracle advanced 6.4 percent to $24.34. Second-quarter net income rose 13 percent to $1.46 billion from $1.3 billion a year earlier. Excluding some costs, profit was 39 cents a share in the period, which ended Nov. 30. Analysts in a Bloomberg survey estimated 36 cents on average.

Research In Motion jumped 10 percent, the most since April, to $70. Sales in the current quarter will be $4.2 billion to $4.4 billion, and earnings per share will be at least $1.23, RIM said. Analysts had estimated revenue of $4.12 billion and profit excluding some items of $1.12 a share, according to a Bloomberg survey.

Technology shares in the S&P 500 advanced 1.6 percent for the top gain among 10 groups.

Celgene Corp. (CELG) had the biggest gain in the S&P 500, jumping 11 percent to $55.95. The biopharmaceutical company said the Revlimid drug "had met its primary endpoint of a statistically significant improvement" in slowing the progression of multiple myeloma, a form of cancer.

Consumer Shares

A gauge of consumer staples companies in the S&P 500 fell for a fourth straight day, losing 1.6 percent for the steepest loss among 10 groups. Philip Morris International lost 1.3 percent to $48.66. PepsiCo, the biggest snack maker, slipped 0.9 percent to $59.48.

"The concerns are stemming from the prospect of currency devaluations in South America," said Robert Finkel, who trades consumer staples stocks at Stifel Nicolaus & Co. in Baltimore. "A lot of the staples names that have emerging market exposure, specifically to South America, have been getting hit. It hasn't been stock-specific, it's been across the board."

Venezuela's bolivar has weakened 16 percent since Oct. 19 to 5.95 per dollar in unregulated markets today as President Hugo Chavez seized eight banks and the country fell into its first recession in six years in the third quarter, increasing pressure to devalue the official exchange rate of 2.15 per dollar.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net


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