BLBG: U.S. Stocks Rise on China as Investors Await Home Data
U.S. stocks advanced, sending the Standard & Poor’s 500 Index up from an almost seven-week low, amid signs a slump in China’s factory output is easing and speculation America’s housing market is improving.
Facebook Inc. (FB), the biggest social networking site, surged 21 percent after reporting sales that topped analysts’ estimates. Boeing Co. (BA) rose 1.5 percent after boosting its full- year forecast for the third time this year. Dow Chemical Co. (DOW), the largest U.S. chemical maker by sales, climbed 4.3 percent after saying it will cut about 2,400 jobs and shut 20 manufacturing plants to reduce annual costs by $500 million.
The S&P 500 rose 0.2 percent to 1,415.66 at 9:48 a.m. New York time. The Dow Jones Industrial Average added 18.52 points, or 0.1 percent, to 13,121.05. Trading in S&P 500 companies was in line with the 30-day average at this time of day.
“The market is trying to focus on positive data after yesterday’s bummer on earnings,” said Malcolm Polley, who manages $1.1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania. “Signs of improvement in Chinese manufacturing are important from a global perspective. In the U.S., home data is pointing to at least stabilization.”
Equities gained as a survey signaled a smaller contraction in China’s manufacturing. Purchases of new homes in the U.S. probably rose in September to the highest level in more than two years, economists forecast. The Federal Open Market Committee will conclude a two-day meeting in Washington today and release a statement on policy.
Earnings Season
Forty-four companies in the S&P 500 are scheduled to release results today. Earnings at about 70 percent of the index’s companies beat analysts’ estimates, according to data compiled by Bloomberg. Third-quarter sales missed forecasts at 60 percent of companies, according to data compiled by Bloomberg, the data showed.
Concern about a worsening of the earnings picture has sent the S&P 500 down 3.5 percent from this year’s high on Sept. 14. The decline has extended its October loss to 1.8 percent after the index capped four straight months of gains. The benchmark measure is still up 13 percent in 2012 on speculation central bankers will keep economies expanding.
Facebook surged 21 percent to $23.54. Ads delivered to people on mobile devices generated about $150 million during the quarter, or 14 percent of all advertising revenue. That compares with about $10 million in the second quarter, according to an estimate by Brian Wieser, an analyst at Pivotal Research Group. The shares were raised to buy from hold at Stifel Nicolaus & Co.
Facebook Effect
Optimism about Facebook’s outlook helped drive other stocks in the industry higher today. Zynga Inc. (ZNGA), the biggest developer of games played on Facebook, jumped 0.9 percent to $2.22. LinkedIn Corp. (LNKD), the largest professional-networking website, climbed 5.4 percent to $109.76.
Boeing added 1.5 percent to $73.91. The company also reported quarterly earnings that topped estimates amid higher deliveries of commercial and military aircraft.
Dow Chemical climbed 4.3 percent to $29.79. The job cuts, which amount to 5 percent of Dow’s global workforce, follow DuPont Co. (DD)’s announcement yesterday that it’s eliminating 1,500 jobs in part because of declining demand for paint pigment and solar cells, and come even as Dow reported third-quarter earnings that exceeded analysts’ estimates.
US Airways Group Inc. (LCC) jumped 1.7 percent to $12.30. The carrier that wants to merge with American Airlines said third- quarter profit more than doubled as passenger traffic increased and the price it paid for jet fuel declined.
Internet Searches
IAC/InterActiveCorp (IACI) gained 2.3 percent to $53.60. The company which operates websites such as Ask.com and Match.com topped analysts’ estimates for third-quarter profit after attracting more users for Internet searches.
Netflix Inc. (NFLX) plunged 13 percent to $59.05. The world’s largest online video service cut its forecast for domestic growth and predicted larger losses from international expansion.
Eli Lilly & Co. (LLY) lost 1.7 percent to $51.06 after reporting third-quarter earnings that missed analyst estimates after generic competition reduced revenue from the schizophrenia treatment Zyprexa, once the company’s top-selling drug.
United Therapeutics Corp. (UTHR) slumped 15 percent to $45.31 after U.S. regulators rejected the company’s oral version of Remodulin to treat a lung disorder.
Two New York Times Co. (NYT) option trades pushed bearish wagers to the highest level ever after the publisher of the third- biggest U.S. newspaper by weekday circulation rallied to a 20- month peak.
The ratio of outstanding puts to sell the stock versus calls increased almost 30-fold in two days to 4.1-to-1 on Oct. 22, an all-time high, according to data compiled by Bloomberg. A block of 8,500 January $10 puts changed hands that day after 10,000 traded at the end of last week, the data show. Times Co.’s shares climbed 37 percent this year through yesterday and touched its highest price since February 2011 last week.
“The stock has had a nice run which you may want to hedge,” Boniface “Buzz” Zaino, a money manager at Royce & Associates LLC in New York, said yesterday via phone. His firm manages about $36 billion including shares of the publisher. “You could get a near-term bearish case based on concerns about the economy for the next six months and what’s going to happen to advertising dollars.”
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
