US stocks climbed, halting a two- week drop for the Standard & Poor’s 500 Index, as companies from Intel Corp. to Johnson & Johnson posted earnings that exceeded estimates and housing starts increased.
Intel, Johnson & Johnson and Wynn Resorts Ltd added at least 5.8 per cent after their quarterly adjusted earnings beat analysts’ projections by at least 7.3 per cent this past week. D R Horton Inc advanced 4 percent for the week as housing starts exceeded estimates. Halliburton Co rallied 7.8 per cent after Moody’s Investors Services said the company is less likely to face fines from the Gulf of Mexico oil spill.
The S&P 500 advanced 1.3 per cent to 1,337.38 in the week. The index is up 0.9 per cent in April. The Dow Jones Industrial Average rose 164.16 points, or 1.3 per cent, to 12,505.99 in the week after it slipped 0.3 per cent the previous week. The gain sent the Dow to the highest level since June 5, 2008 on April 21. US markets were closed April 22 for the Good Friday holiday.
“It’s going to be another strong quarter of earnings,” said Jeffrey Lindsey, a portfolio manager at BlackRock Inc., which oversees $3.65 trillion as the world’s largest asset manager. The market is cheap, he said. “It could be that people are surprised with the strength of the stock market, despite clearly important macro concerns just because the starting point is still inexpensive.”
The S&P 500 has risen 6.3 per cent in 2011, and is up 6.4 per cent since reaching 1,256.88, the low for the year, on March 16. Corporate earnings are exceeding projections by 9.8 per cent so far this season, while economic reports from housing to manufacturing are boosting investor confidence this month. The index is trading at 13.7 times the estimated operating earnings of its companies, compared with an average of 18.1 times reported profit over the last decade.
TECHNOLOGY LEADS
Technology shares added 3 per cent over the past four sessions as Intel, the biggest chipmaker, Apple Inc and International Business Machines Corp. all posted results that exceeded estimates. S&P 500 financial companies are posting the best results so far in the first-quarter reporting season, exceeding estimates by 14 per cent, according to data compiled by Bloomberg.
SLM Corp. had the third-biggest increase in the S&P 500 this past week, adding 10 per cent to $16.31. The student lender known as Sallie Mae declared its first dividend since 2007 and reported first-quarter earnings that exceeded analyst estimates.
Intel Corp, the world’s biggest chipmaker, helped lead technology stocks higher after forecasting second-quarter sales that may top analysts estimates, evidence of booming demand for machines that deliver computing over the Internet. First-quarter earnings and sales both surpassed estimates and the Santa Clara, California-based company rose 8.7 per cent in the week, the biggest weekly advance since July 2009.
Apple Inc climbed 7.1 per cent in the week, while Yahoo! Inc advanced 1.4 per cent, after they reported better-than- forecast results. Johnson & Johnson, the world’s second-biggest seller of health products, increased its annual earnings forecast after quarterly profit beat estimates on drug sales and a weak dollar.
The shares rose the most since 2008 the day they reported and advanced 5.8 per cent for the week. Wynn Resorts rallied 6.7 per cent and Wynn Macau Ltd, a unit of the casino operator founded by billionaire Steven Wynn, rose 2.9 per cent in the week.
