U.S. stocks rose, sending the Standard & Poor’s 500 Index to its best week since July, as earnings from General Electric Co. and Morgan Stanley beat estimates and concern eased that the Ukraine crisis may worsen.
GE climbed 1.7 percent after results beat forecasts. Morgan Stanley added 2.9 percent as a gain in trading revenue helped profit top estimates. Google Inc. (GOOG) and International Business Machines Corp. slid at least 3.3 percent as sales trailed projections.
The S&P 500 rose 0.1 percent to 1,864.85 at 4 p.m. in New York, extending its gain for the week to 2.7 percent. The Dow Jones Industrial Average fell 16.31 points, or 0.1 percent, to to 16,408.54. IBM, which accounts for 7.4 percent of the Dow, took 41 points off the index’s total today. About 6.2 billion shares changed hands on U.S. exchanges, 8.6 percent below the three-month average. The U.S. equity markets are closed tomorrow for a holiday.
“Any deceleration of the conflict will be a relief for the market,” Terry Morris, a senior equity manager who helps oversee about $2.8 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said in a phone interview. “Combine the ease of the tension between Russia and Ukraine and generally a positive tone of earnings, the result is an upward drifting market.”
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Equities turned higher after four-way talks on the crisis in Ukraine ended with an accord aimed at taking the first steps toward de-escalating the conflict after President Vladimir Putin said he hopes he won’t have to send troops.
Talks in Geneva today between Russian Foreign Minister Sergei Lavrov, his Ukrainian counterpart, Andriy Deshchytsia, U.S. Secretary of State John Kerry and Catherine Ashton, the European Union’s foreign-policy chief, went on for more than six hours, longer than scheduled.
Earnings Estimates
The S&P 500 rose each day this week to erase its decline for the year. The gauge sank 2.7 percent last week, the most since 2012.
Twenty-five companies in the S&P 500 report earnings today. Profit per share for the index’s constituents probably increased 0.7 percent in the first quarter, according to analyst estimates compiled by Bloomberg. Analysts projected growth of 6.6 percent at the start of the year.
“The market, with the sell-off and some downward revisions to estimates, maybe set itself for better reactions to earnings than it might have been the case earlier,” Gerry Paul, chief investment officer of U.S. value equities at AllianceBernstein LP in New York, said by phone. The firm oversees $454 billion. “Broadly, what we’re going to learn from earnings is that we’re pretty march on the trajectory of what the market expect it to be on.”
Jobless Claims
Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the labor market continues to strengthen. Jobless claims increased by 2,000 to 304,000 in the week ended April 12 from a revised 302,000 the prior period that was the lowest since September 2007, a Labor Department report showed.
The Chicago Board Options Exchange Volatility Index (VIX), a gauge for U.S. stock volatility known as the VIX, fell 5.8 percent to 13.36. The measure has lost 22 percent this week, the most since January 2013.
Seven of 10 S&P 500 industries gained as energy and industrial companies each advanced 0.8 percent advance for the best performance.
Expanding Margins
GE rallied 1.7 percent to $26.56. The company posted first-quarter earnings that beat analysts’ estimates, buoyed by expanding margins in the industrial businesses that make products such as jet engines.
Morgan Stanley added 2.9 percent to $30.76. First-quarter net income rose to 74 cents a share from 48 cents a year earlier, the bank said. Excluding an accounting gain tied to the firm’s own debt, profit from continuing operations was 68 cents a share, topping the 60-cent average estimate of analysts surveyed by Bloomberg.
The Philadelphia Semiconductor Index climbed 1.9 percent, the biggest gain in a month. Micron Technology Inc., the largest U.S. maker of memory chips, added 6.4 percent to $23.91.
SanDisk Corp. jumped 9.4 percent to $82.99 for the biggest rally in the S&P 500. (SPX) The maker of flash memory for mobile devices boosted its forecast for gross margin this year to between 47 percent and 49 percent. That’s up from its previous guidance range of between 45 percent to 48 percent and compares with analysts’ estimates that call for 47.4 percent.
Google, IBM
Google’s Class C shares fell 3.7 percent to $536.10. The owner of the largest search engine said revenue, excluding sales passed on to partners, totaled $12.2 billion in the first quarter. That missed a projection by analysts for $12.3 billion.
IBM dropped 3.3 percent to $190.01. The company said first-quarter revenue fell 3.9 percent from a year earlier to $22.5 billion. That missed the average estimate of analysts that called for $22.9 billion.
UnitedHealth Group Inc. sank 3.1 percent to $75.78 for its worst day since October. The biggest U.S. health insurer said first-quarter profit fell 7.8 percent. It has derived growth from Medicare and has the biggest program among publicly traded insurers, with 3 million enrollees. In April, the government implemented a second round of cuts to Medicare Advantage.
– Bloomberg
