Wednesday, July 20, 2011

U.S. Stocks Gain as Apple’s Earnings Boost Technology Shares; AMR Advances

U.S. stocks rose, sending the Standard & Poor’s 500 Index to a second day of gains, as technology shares rallied after Apple Inc. (AAPL) reported earnings that exceeded analysts’ estimates.

Apple, the maker of the iPhone and the iPad, jumped 3.9 percent as it led companies reporting improved results. VMware Inc. (VMW), the biggest maker of programs that let computers run multiple operating systems, rose 4.1 percent after forecasting sales that topped projections. AMR Corp. (AMR) advanced 3.7 percent as the American Airlines parent agreed to buy 460 single-aisle jets from Airbus SAS and Boeing Co. in the industry’s biggest-ever order.

The S&P 500 gained 0.1 percent to 1,328.13 at 9:36 a.m. in New York, after surging 1.6 percent yesterday. The Dow Jones Industrial Average fell 2.72 points, or less than 0.1 percent, to 12,584.70. Technology shares had the biggest gains for a second day among 10 S&P 500 groups, rising 0.8 percent.

“It looks like we’re inching towards resolution in Washington about the debt limit and more importantly, profits that have been reported in the last couple of days have been nothing short of spectacular,” said Stanley Nabi, New York- based vice chairman of Silvercrest Asset Management Group, which oversees more than $9 billion, in a telephone interview. “It’s not only Apple, which beat by a wide margin, but also run-of- the-mill businesses.”

The S&P 500 had its biggest rally yesterday since March as President Barack Obama endorsed a bipartisan deficit-reduction plan and companies from International Business Machines Corp. to Coca-Cola Co. reported profit that topped estimates.

Debt-Cutting Plan
Obama embraced a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would combine tax increases and spending cuts, saying it could end a congressional deadlock over raising the U.S. borrowing limit. The news spurred optimism that lawmakers will reach an agreement that will help the nation avoid default.

The index has declined 2.7 percent from a three-year high in April amid speculation that the sovereign debt crisis in Europe is spreading across the region and concern that U.S. lawmakers will fail to reach a deal on raising the nation’s debt limit before the Aug. 2 deadline.

Positive earnings reports pushed the benchmark index for U.S. stocks from a three-week low yesterday. Among the 61 companies in the S&P 500 that posted results since July 11, 54 beat the average analyst estimate for per-share profit, data compiled by Bloomberg show.

Intel Corp. and American Express Co. are among S&P 500 companies reporting earnings today. Data from the National Association of Realtors at 10 a.m. in Washington may show sales of previously owned U.S. homes rose in June from a six-month low, according to a Bloomberg survey of economists.

Apple Advances
Apple gained 3.9 percent to $391.69. The biggest technology company by market value said third-quarter net income more than doubled to $7.31 billion, or $7.79 a share, lifted by record sales of iPhones and iPad tablets. Analysts had predicted profit of $5.87 a share, according to Bloomberg data.

The report eased investors’ concern that sales would suffer from the lack of a new iPhone, which isn’t expected until September, and about the absence of Chief Executive Officer Steve Jobs, who has been on medical leave since January.

VMware jumped 4.1 percent to $110.32. Revenue in the current period will be $915 million to $940 million, the company said, topping the $898.2 million average estimate of analysts surveyed by Bloomberg.

AMR climbed 3.7 percent to $5.11 after agreeing to buy 260 Airbus planes and 200 Boeing 737s, with options and future purchase rights for 465 more. Based on average prices, the retail value is about $38.5 billion. Boeing increased 0.7 percent to $71.02.

United Technologies
United Technologies Corp. (UTX) declined 2.1 percent to $87. The maker of Pratt & Whitney jet engines said second-quarter profit rose more than analysts estimated, led by its Carrier division, as orders climbed. The company also raised its full-year sales and profit forecasts.

Nalco Holding Co. (NLC) surged 27 percent to $36.70 after agreeing to be bought by Ecolab Inc. (ECL), the largest maker of cleaning chemicals for hotels and restaurants, for $5.4 billion. Naperville, Illinois-based Nalco provides water treatment services and its Corexit dispersant was used to help clean up the oil spill from BP Plc’s Macondo well in the Gulf of Mexico.

Yahoo! Inc. fell 3.6 percent to $14.06. The most-visited web portal in the U.S. reported revenue that missed estimates as marketers favoured competing sites and a sales-team shakeup made it harder to clinch advertising orders.

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