U.S. stocks rose, snapping a four- day slump in the Standard & Poor’s 500 Index, as European Central Bank President Mario Draghi pledged to defend the euro.
3M Co. (MMM) (MMM), the maker of Post-It Notes, and Visa Inc. (V) (V), the world’s largest payments network, advanced at least 2 percent on better-than-estimated earnings. PulteGroup Inc. (PHM) (PHM), the largest U.S. homebuilder by revenue, surged 16 percent amid an increase in orders. Sprint Nextel Corp. (S) (S) and MetroPCS Communications Inc. (PCS) (PCS) rallied at least 21 percent after their results. Facebook Inc. declined 6.6 percent ahead of its quarterly numbers.
About two stocks gained for each falling on U.S. exchanges at 2:19 p.m. New York time. The S&P 500 advanced 1.4 percent to 1,357.07. The Dow Jones Industrial Average added 195.11 points, or 1.5 percent, to 12,871.16. Trading in S&P 500 companies was up 37 percent from the 30-day average at this time of day. The euro rallied by the most in almost a month against the dollar.
“It is a big deal,” said Liz Ann Sonders, the New York- based chief investment strategist at Charles Schwab Corp., which has $1.8 trillion in client assets. “The markets have been looking for a more definitive acknowledgement by key people like Draghi that they are willing to do what they need to do. We feel that if they want to save the euro, it would involve true QE,” she said, referring to bond buying to stimulate the economy.
Global stocks rallied as Draghi suggested policy makers may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. The ECB mothballed its bond-buying program in March as it pushed governments to do more to control their deficits.
[h=2]Earnings Season[/h]All 10 industries in the S&P 500 gained today as earnings at about 72 percent of the 263 companies in the measure which have reported second-quarter results exceeded analysts’ projections, according to data compiled by Bloomberg.
The bull market in American equities is intact and the S&P 500 will probably reach 1,380 within the next few months and rally from there, according to Laszlo Birinyi, president of research and money-management firm Birinyi Associates Inc. in Westport, Connecticut. He said concern about second-quarter earnings are overblown and too many investors are worried about a ‘‘worst-case’’ outcome for stocks.
‘‘It will be, as it has been, a case of three steps forward, two backward and trends lasting one day or five hours,’’ wrote Birinyi in a note to clients. The former Salomon Brothers Inc. equity trader, who described his forecast as ‘‘1,380 later this summer, and then higher,’’ said in the note: ‘‘Despite the frustrations of July with its volatility and curious price activity, we remain optimistic.’’
[h=2]July’s Loss[/h]Today’s rally trimmed this month’s decline in the S&P 500 to 0.3 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, slumped 7.2 percent to 17.95. Earlier this week, the VIX (VIX) ended at the highest since June 15 amid concern about a global slowdown and Europe’s debt crisis.
3M rallied 2 percent to $90.51. Second-quarter profit beat estimates as gains in efficiency helped trump a drag from foreign-exchange rates. 3M had to overcome a stronger dollar that eroded the value of local-currency sales outside the U.S.
Visa rose 3 percent to $125.85. It has benefited from a consumer shift from cash to electronic payments that shows no signs of abating, while parrying threats to its business model.
A measure of homebuilders in S&P indexes climbed 5.8 percent. PulteGroup soared 16 percent, the most on a closing basis since 2008, to $11.67 after reporting better-than- estimated profit and a 32 percent jump in orders.
[h=2]Phone Shares[/h]Better-than-estimated earnings also drove a surge in telephone shares. The group rose the most among 10 industries in the S&P 500 today, adding 3.1 percent.
Sprint Nextel rallied 21 percent, the most on a closing basis since 2008, to $4.09. Sales at the wireless carrier were bolstered by customers spending more on data plans. Even so, its contract subscriber base has shrunk for five years, contributing to 19 straight quarterly losses.
MetroPCS Communications soared 36 percent, the most in the S&P 500, to $8.56. The pay-as-you-go wireless carrier reported second-quarter earnings that beat estimates amid a decrease in promotional costs.
Akamai Technologies Inc. (AKAM) (AKAM), which helps businesses deliver data more quickly over the Internet, soared 22 percent to $34.52. The company reported profit and revenue that beat estimates, benefiting from the growth of cloud computing.
Western Digital Corp. (WDC) (WDC) jumped 18 percent, the most on a closing basis since 2009, to $38.39. The maker of disk drives and networking products reported fiscal fourth-quarter sales and profit that topped analysts’ estimates.
[h=2]Whole Foods[/h]Whole Foods Market Inc. (WFM) (WFM) climbed 10 percent, the biggest gain since February, to $93.38. The largest U.S. natural-goods grocer reported third-quarter profit that rose more than analysts estimated and boosted its annual earnings forecast as sales gained at established stores.
Moody’s Corp. (MCO) (MCO) rose 10 percent to $39.74 after the world’s second-largest provider of credit ratings reported second- quarter profit that beat analyst estimates.
CBS Corp. (CBS) (CBS) jumped 4.2 percent to $32.41. The owner of the most-watched U.S. television network will raise its quarterly dividend 20 percent to 12 cents and expand a stock buyback program to as much as $4.7 billion.
Stocks rose even as data showed that a slump in June orders for equipment signals business investment may cool in the second half of the year. Jobless claims fell more than forecast last week, which may have resulted from difficulty adjusting data for seasonal shutdowns of auto factories.
[h=2]Facebook’s Results[/h]Facebook (FB) (FB) slumped 6.5 percent to $27.44. Analyst estimates show the biggest social networking site may report a quarterly profit of 11 cents a share today. The shares fell after Zynga Inc. (ZNGA) (ZNGA), the biggest developer of games played on Facebook’s social network, missed analysts’ second-quarter revenue and profit estimates. Zynga plunged 39 percent to $3.09.
The cost of protecting against stock swings that have whipsawed owners of Facebook since its public debut is falling at the fastest rate ever, trading in the options market shows. Facebook implied volatility, the proxy for future share movement used to price equity derivatives, plunged 10 percent on July 24 from a record high, according to data on 30-day contracts closest to the share price compiled by Bloomberg.
After an IPO marred by computer errors and more than $21 billion of lost market value, investors are betting the earnings release will restore confidence. Downside in the Menlo Park, California-based company is limited after so much bad news, according to Carlo Panaccione, co-founder of Navigation Group.
[h=2]‘Speculative Approach’[/h]‘‘It wouldn’t be that bad to buy an option on the stock hoping it pops up back to at least its IPO price,” Panaccione, whose company oversees about $375 million in Redwood Shores, California, said in a phone interview. “You could play the earnings call if you’re taking the speculative approach.”
Raw material companies had the smallest advance in the S&P 500 among 10 industries. Dow Chemical Co. (DOW) (DOW) slumped 3.7 percent to $29.15. The largest U.S. chemical company reported a bigger drop in earnings and sales than analysts estimated and said the outlook for global demand for the rest of the year is “bleak.”
Cliffs Natural Resources Inc. (CLF) (CLF) slid 9.4 percent to $37.27 as the largest U.S. iron-ore producer forecast (CLF) higher costs and lower prices.
The Bloomberg U.S. For-Profit Education Index fell 4.5 percent, to the lowest level since the data started being compiled in 2005 (USEDU), after ITT Educational Services Inc. (ESI) (ESI) and Strayer Education Inc. (STRA) (STRA) said student enrollment declined in the second quarter. ITT Educational sank 12 percent to $44.59, and Strayer plunged 14 percent to $78.07.
[h=2]Airlines Tumble[/h]Airline stocks fell, sending a benchmark index toward its longest decline in two years, after United Continental Holdings Inc. (UAL) (UAL) posted a quarterly profit that missed analysts’ estimates. United slid 8.7 percent to $18.63 to pace the Bloomberg U.S. Airlines Index toward an eighth straight daily drop, the most since June 2010. The index dropped 2.4 percent today.
Boston Scientific Corp. (BSX) (BSX) slid 8.8 percent to $4.86. The second-biggest U.S. heart device-maker fell as sinking demand for stents and defibrillators led to a fourth consecutive quarterly sales drop.
Cash America International Inc. (CSH) (CSH) dropped 18 percent to $37.13. The world’s largest pawn shop operator posted results that missed estimates and said third-quarter earnings will be lower than last year.
Anyone buying Apple (AAPL) (AAPL) Inc.’s stock after last quarter’s sales shortfall at the iPhone maker has history on their side, according to Gene Munster, a Piper Jaffray Cos. analyst.
[h=2]Disappointing Revenue[/h]A study shows how Apple performed after four earlier cases of disappointing quarterly revenue, as tracked by Munster. They occurred in fiscal 2006, 2007, 2008 and 2011, with iPhone sales trailing estimates in the latter case. Six months later, the shares were 23 percent higher on average.
“It’s going to be an in-vogue stock again shortly,” Munster said yesterday in a Bloomberg Radio interview. He cited the pending introduction of the next iPhone model, known as the iPhone 5, which he expects in October. “We’re going to see a significant rebound in the December quarter, and that’s probably an understatement,” he said.
To contact the reporter on this story: Rita Nazareth in New York at [email protected]
To contact the editor responsible for this story: Lynn Thomasson at [email protected]
3M Co. (MMM) (MMM), the maker of Post-It Notes, and Visa Inc. (V) (V), the world’s largest payments network, advanced at least 2 percent on better-than-estimated earnings. PulteGroup Inc. (PHM) (PHM), the largest U.S. homebuilder by revenue, surged 16 percent amid an increase in orders. Sprint Nextel Corp. (S) (S) and MetroPCS Communications Inc. (PCS) (PCS) rallied at least 21 percent after their results. Facebook Inc. declined 6.6 percent ahead of its quarterly numbers.
About two stocks gained for each falling on U.S. exchanges at 2:19 p.m. New York time. The S&P 500 advanced 1.4 percent to 1,357.07. The Dow Jones Industrial Average added 195.11 points, or 1.5 percent, to 12,871.16. Trading in S&P 500 companies was up 37 percent from the 30-day average at this time of day. The euro rallied by the most in almost a month against the dollar.
“It is a big deal,” said Liz Ann Sonders, the New York- based chief investment strategist at Charles Schwab Corp., which has $1.8 trillion in client assets. “The markets have been looking for a more definitive acknowledgement by key people like Draghi that they are willing to do what they need to do. We feel that if they want to save the euro, it would involve true QE,” she said, referring to bond buying to stimulate the economy.
Global stocks rallied as Draghi suggested policy makers may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. The ECB mothballed its bond-buying program in March as it pushed governments to do more to control their deficits.
[h=2]Earnings Season[/h]All 10 industries in the S&P 500 gained today as earnings at about 72 percent of the 263 companies in the measure which have reported second-quarter results exceeded analysts’ projections, according to data compiled by Bloomberg.
The bull market in American equities is intact and the S&P 500 will probably reach 1,380 within the next few months and rally from there, according to Laszlo Birinyi, president of research and money-management firm Birinyi Associates Inc. in Westport, Connecticut. He said concern about second-quarter earnings are overblown and too many investors are worried about a ‘‘worst-case’’ outcome for stocks.
‘‘It will be, as it has been, a case of three steps forward, two backward and trends lasting one day or five hours,’’ wrote Birinyi in a note to clients. The former Salomon Brothers Inc. equity trader, who described his forecast as ‘‘1,380 later this summer, and then higher,’’ said in the note: ‘‘Despite the frustrations of July with its volatility and curious price activity, we remain optimistic.’’
[h=2]July’s Loss[/h]Today’s rally trimmed this month’s decline in the S&P 500 to 0.3 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, slumped 7.2 percent to 17.95. Earlier this week, the VIX (VIX) ended at the highest since June 15 amid concern about a global slowdown and Europe’s debt crisis.
3M rallied 2 percent to $90.51. Second-quarter profit beat estimates as gains in efficiency helped trump a drag from foreign-exchange rates. 3M had to overcome a stronger dollar that eroded the value of local-currency sales outside the U.S.
Visa rose 3 percent to $125.85. It has benefited from a consumer shift from cash to electronic payments that shows no signs of abating, while parrying threats to its business model.
A measure of homebuilders in S&P indexes climbed 5.8 percent. PulteGroup soared 16 percent, the most on a closing basis since 2008, to $11.67 after reporting better-than- estimated profit and a 32 percent jump in orders.
[h=2]Phone Shares[/h]Better-than-estimated earnings also drove a surge in telephone shares. The group rose the most among 10 industries in the S&P 500 today, adding 3.1 percent.
Sprint Nextel rallied 21 percent, the most on a closing basis since 2008, to $4.09. Sales at the wireless carrier were bolstered by customers spending more on data plans. Even so, its contract subscriber base has shrunk for five years, contributing to 19 straight quarterly losses.
MetroPCS Communications soared 36 percent, the most in the S&P 500, to $8.56. The pay-as-you-go wireless carrier reported second-quarter earnings that beat estimates amid a decrease in promotional costs.
Akamai Technologies Inc. (AKAM) (AKAM), which helps businesses deliver data more quickly over the Internet, soared 22 percent to $34.52. The company reported profit and revenue that beat estimates, benefiting from the growth of cloud computing.
Western Digital Corp. (WDC) (WDC) jumped 18 percent, the most on a closing basis since 2009, to $38.39. The maker of disk drives and networking products reported fiscal fourth-quarter sales and profit that topped analysts’ estimates.
[h=2]Whole Foods[/h]Whole Foods Market Inc. (WFM) (WFM) climbed 10 percent, the biggest gain since February, to $93.38. The largest U.S. natural-goods grocer reported third-quarter profit that rose more than analysts estimated and boosted its annual earnings forecast as sales gained at established stores.
Moody’s Corp. (MCO) (MCO) rose 10 percent to $39.74 after the world’s second-largest provider of credit ratings reported second- quarter profit that beat analyst estimates.
CBS Corp. (CBS) (CBS) jumped 4.2 percent to $32.41. The owner of the most-watched U.S. television network will raise its quarterly dividend 20 percent to 12 cents and expand a stock buyback program to as much as $4.7 billion.
Stocks rose even as data showed that a slump in June orders for equipment signals business investment may cool in the second half of the year. Jobless claims fell more than forecast last week, which may have resulted from difficulty adjusting data for seasonal shutdowns of auto factories.
[h=2]Facebook’s Results[/h]Facebook (FB) (FB) slumped 6.5 percent to $27.44. Analyst estimates show the biggest social networking site may report a quarterly profit of 11 cents a share today. The shares fell after Zynga Inc. (ZNGA) (ZNGA), the biggest developer of games played on Facebook’s social network, missed analysts’ second-quarter revenue and profit estimates. Zynga plunged 39 percent to $3.09.
The cost of protecting against stock swings that have whipsawed owners of Facebook since its public debut is falling at the fastest rate ever, trading in the options market shows. Facebook implied volatility, the proxy for future share movement used to price equity derivatives, plunged 10 percent on July 24 from a record high, according to data on 30-day contracts closest to the share price compiled by Bloomberg.
After an IPO marred by computer errors and more than $21 billion of lost market value, investors are betting the earnings release will restore confidence. Downside in the Menlo Park, California-based company is limited after so much bad news, according to Carlo Panaccione, co-founder of Navigation Group.
[h=2]‘Speculative Approach’[/h]‘‘It wouldn’t be that bad to buy an option on the stock hoping it pops up back to at least its IPO price,” Panaccione, whose company oversees about $375 million in Redwood Shores, California, said in a phone interview. “You could play the earnings call if you’re taking the speculative approach.”
Raw material companies had the smallest advance in the S&P 500 among 10 industries. Dow Chemical Co. (DOW) (DOW) slumped 3.7 percent to $29.15. The largest U.S. chemical company reported a bigger drop in earnings and sales than analysts estimated and said the outlook for global demand for the rest of the year is “bleak.”
Cliffs Natural Resources Inc. (CLF) (CLF) slid 9.4 percent to $37.27 as the largest U.S. iron-ore producer forecast (CLF) higher costs and lower prices.
The Bloomberg U.S. For-Profit Education Index fell 4.5 percent, to the lowest level since the data started being compiled in 2005 (USEDU), after ITT Educational Services Inc. (ESI) (ESI) and Strayer Education Inc. (STRA) (STRA) said student enrollment declined in the second quarter. ITT Educational sank 12 percent to $44.59, and Strayer plunged 14 percent to $78.07.
[h=2]Airlines Tumble[/h]Airline stocks fell, sending a benchmark index toward its longest decline in two years, after United Continental Holdings Inc. (UAL) (UAL) posted a quarterly profit that missed analysts’ estimates. United slid 8.7 percent to $18.63 to pace the Bloomberg U.S. Airlines Index toward an eighth straight daily drop, the most since June 2010. The index dropped 2.4 percent today.
Boston Scientific Corp. (BSX) (BSX) slid 8.8 percent to $4.86. The second-biggest U.S. heart device-maker fell as sinking demand for stents and defibrillators led to a fourth consecutive quarterly sales drop.
Cash America International Inc. (CSH) (CSH) dropped 18 percent to $37.13. The world’s largest pawn shop operator posted results that missed estimates and said third-quarter earnings will be lower than last year.
Anyone buying Apple (AAPL) (AAPL) Inc.’s stock after last quarter’s sales shortfall at the iPhone maker has history on their side, according to Gene Munster, a Piper Jaffray Cos. analyst.
[h=2]Disappointing Revenue[/h]A study shows how Apple performed after four earlier cases of disappointing quarterly revenue, as tracked by Munster. They occurred in fiscal 2006, 2007, 2008 and 2011, with iPhone sales trailing estimates in the latter case. Six months later, the shares were 23 percent higher on average.
“It’s going to be an in-vogue stock again shortly,” Munster said yesterday in a Bloomberg Radio interview. He cited the pending introduction of the next iPhone model, known as the iPhone 5, which he expects in October. “We’re going to see a significant rebound in the December quarter, and that’s probably an understatement,” he said.
To contact the reporter on this story: Rita Nazareth in New York at [email protected]
To contact the editor responsible for this story: Lynn Thomasson at [email protected]