By Whitney Kisling - Apr 21, 2012 3:36 AM GMT+0700
U.S. stocks rose, snapping a two- day decline for the Standard & Poor’s 500 Index, as profits from companies including Microsoft (MSFT) Corp. and General Electric Co. (GE) beat estimates and German business confidence improved.
Equities pared gains as Apple Inc. (AAPL) slid 2.5 percent, extending its loss since April 9 to 9.9 percent. Microsoft, the largest software maker, rose 4.6 percent. GE jumped 1.2 percent as profit gains at the energy business outpaced finance for the first time in two years. McDonald’s Corp. added 0.7 percent amid higher-than-estimated earnings. Bank of America Corp. tumbled 4.7 percent, driving financial shares lower.
The S&P 500 gained 0.1 percent to 1,378.53 at 4 p.m. New York time, as the benchmark index for American equities completed a 0.6 percent weekly advance. The Dow Jones Industrial Average rose 65.16 points, or 0.5 percent, to 13,029.26 today. More than 6.6 billion shares changed hands on U.S. exchanges, or 1.1 percent below the three-month average.
“On the back of some weaker recent economic data, the earnings story continues to showcase that companies can wring out some profits here,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “With the constant noise in the background of Europe we seem to be focusing more on the domestic story, at least today. That just gives more credence to the fact that the recovery continues to be in place.”
Profits for the 94 companies in the S&P 500 that reported quarterly results since April 10 beat estimates by 8.5 percent, according to data compiled by Bloomberg. The benchmark gauge for U.S. equities has risen 9.6 percent in 2012, even after the index lost 0.6 percent yesterday as home sales fell and jobless claims were more than forecast.
German Confidence
A report today showed German business confidence unexpectedly increased for a sixth month in April, adding to evidence that Europe’s largest economy can weather the sovereign-debt crisis.
Seven out of 10 industries in the S&P 500 advanced today as utilities and consumer-staples companies gained the most.
Microsoft rose 4.6 percent, the most in three months, to $32.42. The software maker reported fiscal third-quarter profit that topped estimates on better-than-expected sales of Windows and Office software for businesses. Corporate demand for Windows computers made up for tepid interest from consumers opting for tablet machines.
GE rose 1.2 percent to $19.36. Chief Executive Officer Jeffrey Immelt is increasing the focus on divisions that make gas turbines, jet engines and diesel locomotives while shrinking GE Capital’s balance sheet. He has pledged to boost industrial income this year by 5 percent to 10 percent, excluding the effect of acquisitions, while expanding margins.
Work Boots
Honeywell International Inc. (HON) rallied 2.4 percent to $59.39. The maker of products from flight controls to work boots raised its 2012 forecast after posting quarterly profit that beat analysts’ estimates on demand for aircraft parts and energy technology.
Schlumberger Ltd. (SLB) gained 2.7 percent to $71.70. The world’s largest oilfield-services provider reported first-quarter profit rose 38 percent as customers increased higher margin deep-water drilling around the globe in response to climbing crude prices.
E*Trade gained the most in the S&P 500, rising 6.1 percent to $10.48, as quarterly profit and revenue exceeded estimates. The company said loan-loss provisions fell 41 percent to $72 million from the fourth quarter. The retail broker posted four years of losses through 2010, partly because of the subprime mortgage market collapse in 2007.
McDonald’s Gain
McDonald’s Corp. (MCD) added 0.7 percent to $95.94. The world’s largest restaurant chain reported a 4.8 percent gain in first- quarter profit as new menu items such as Chicken McBites attracted U.S. consumers.
SanDisk, which makes memory chips used in mobile devices, declined 11 percent, the most in the S&P 500, to $35.91 after giving a second-quarter sales forecast that fell short of some analysts’ estimates. Chip production at SanDisk and its rivals is outpacing demand, causing prices to fall, Chief Executive Officer Sanjay Mehrotra said on a conference call with analysts yesterday. Some of the company’s customers also ordered fewer chips for mobile phones than SanDisk had predicted, he said.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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