Thread: U.S. Stocks Rise for 3rd Day as Earnings Fuel Optimism

Bloomberg News

U.S. Stocks Rise for 3rd Day as Earnings Fuel Optimism

By Lu Wang and Whitney Kisling
July 08, 2013

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  U.S. stocks rose, giving the Standard & Poor’s 500 Index a third straight day of gains, as the start of corporate earnings season fueled increased optimism about growth in the world’s largest economy.
  Alcoa Inc. (AA) increased 1.4 percent before the biggest U.S. aluminum producer reported results. The stock added another 1.3 percent in extended trading after earnings beat analysts’ estimates. Dell Inc. (DELL) gained 3.1 percent as the largest shareholder-advisory firm said investors should accept founder Michael Dell’s buyout offer. Priceline.com (PCLN) rallied 3.9 percent after Morgan Stanley raised its recommendation on the stock. Intel Corp. (INTC) slumped 3.6 percent amid an analyst downgrade.
  The S&P 500 (SPX) added 0.5 percent to 1,640.46 at 4 p.m. in New York, the highest since June 18. The Dow Jones Industrial Average rose 88.85 points, or 0.6 percent, to 15,224.69. More than 6 billion shares traded hands on U.S. exchanges today, about 8 percent below the three-month average.
  “I really don’t think the earnings season is going to be so much about the second quarter, but more about the pickup in second half that the market appears to be anticipating,” Gary Flam, who helps oversee $7 billion at Bel Air Investment Advisors LLC in Los Angeles, said in a phone interview. “The market is getting comfortable that the economy is strong enough to withstand reduced Fed support. The market is inching toward normalcy. We’re not in an abnormal environment where the Fed and Fed actions are dictating market movements.”
  Economic Data
  
  The S&P 500 (SPX) gained 1.6 percent last week, as better-than-estimated economic data tempered concern over a possible scaling back of Fed stimulus measures. Employers added more jobs than forecast in June, and other data during the week showed jobless claims decreased and manufacturing improved. While the index has fallen 1.7 percent since its May 21 record, the gauge is up 15 percent for 2013.
  Investors will gain more insight into the central bank’s plans when the Federal Open Market Committee publishes minutes from its June meeting on July 10. Chairman Ben Bernanke also speaks that day. He said on June 19 the Fed may pare its asset-purchase program this year and end it in mid-2014 if growth meets policy makers’ estimates.
  The S&P 500 fell nearly 5 percent in the four days after Bernanke’s comments following the FOMC meeting. The gauge has since gained 4.3 percent and is about 0.7 percent below its June 18 close.
  FOMC Minutes
  
  “All eyes this week are likely to be on the latest FOMC minutes and comments from Ben Bernanke in light of Friday’s better-than-expected payrolls numbers,” Michael Hewson, a market analyst at CMC Markets Plc in London, wrote in an e-mail. “Will he offer any clues as to the timing of possible tapering or will he simply reiterate previous comments made a few weeks ago?”
  Earnings at companies listed on the S&P 500 rose 1.8 percent last quarter, down from a projection of 8.7 percent six months ago, according to more than 11,000 analyst estimates compiled by Bloomberg. Lower expectations helped about 73 percent of the companies in the benchmark measure exceed forecasts by an average of 5.1 percent for the first three months of the year, Bloomberg data show.
  The Chicago Board Options Exchange Volatility Index (VIX), or VIX, fell 0.7 percent today to 14.78. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, reached a six-month high in June and has since dropped 28 percent.
  Eight of 10 industry groups in the S&P 500 advanced as utility companies and makers of consumer staples rose more than 1 percent. The Russell 2000 (RTY) Index, a benchmark measure for smaller companies, climbed 0.4 percent to a record.
  Alcoa Earnings
  
  Alcoa rose 1.4 percent to $7.92 before becoming the first Dow member to report results. The stock added another 1.3 percent at 4:30 p.m. in New York after second-quarter earnings beat analysts’ estimates as U.S. carmakers used more of the lightweight metal in their latest models.
  The company, which had its credit rating cut to junk by Moody’s Investors Service in May, said profit excluding one-time items was 7 cents a share, exceeding the 6-cent average of 15 estimates compiled by Bloomberg. Sales fell to $5.85 billion, exceeding the $5.79 billion average of nine estimates.
  
  http://www.businessweek.com/news/2013-07-08/u-dot-s-dot-stock-futures-advance-before-alcoa-starts-earnings-season

Dow Up 89: Cheery Day Before Earnings Season

Motley Fool-by John Divine-4 hours ago
When all was said and done, the Dow Jones Industrial Average (DJINDICES: ^DJI ) tacked on 89 points, or 0.6%, to end at 15,225 . . .