Lazard’s Hogan: Cliff makes corporate guidance an iffy proposition
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks rose on Wednesday after a two-day drop as Alcoa Inc. raised its outlook, citing expectations of increased global demand for aluminum.
“We started earnings season, but it’s like a preview before a movie — this is coming attractions week,” said Art Hogan, market strategist at Lazard Capital Markets.
The Dow Jones Industrial Average DJIA +0.56% rose 71.38 points, or 0.5%, to 13,400.23, with 24 of its 30 components rising.
Reversing lower, Alcoa AA +0.53% , was near unchanged a day after the company reported better-than-estimated revenue and an upbeat forecast for the year. Read a blog post on the first five days of 2013 being bullish for stocks.
“Alcoa is better, and it is usually not, so it could be a barometer for the global economy or it could be a company that has done a good job of repairing its balance sheet, or it could be a combination of both. The good news is we haven’t had a household name blow up yet,” Hogan said.
The S&P 500 index SPX +0.40% gained 5.69 points, or 0.4%, to 1,462.84, with industrials leading gains and energy the largest loser of its 10 major industry groups. See 13 stocks that should pay in 2013, according to Goldman Sachs.
The Nasdaq Composite index COMP +0.55% added 16.82 points, or 0.5%, to 3,108.63.
Clearwire Corp. CLWR +7.88% rallied 7.9% after the wireless-network operator drew an unsolicited offer from Dish Network Corp. DISH +3.03% that exceeded a buyout offer from Sprint Nextel Corp. S -1.09% , which already owns a majority of Clearwire.
Constellation Brands Inc. STZ -0.11% also gained after the wine and spirits maker reported increased profit. Read: Constellation Brands net profit up 4.5%.
Apollo Group Inc. APOL -10.55% slipped 10% after the for-profit educator reported declining enrollment for the third quarter and reduced its operating profit outlook for the year.
For every share falling more than two rose on the New York Stock Exchange, where 158 million shares traded as of 10:45 a.m. Eastern.
Composite volume came to 934 million.
“It really is a quiet week as we anticipate an earnings season that begins in earnest next week. The question is, how choppy are the earnings reports, because we expect them to be terrible,” said Hogan of S&P 500 earnings growth that is estimated to rise 2.9% versus the year-ago quarter. “The trick here is when we started the quarter, growth estimates were 9%.”
The question remains whether “there is enough uncertainty with half of the fiscal cliff still unresolved for corporate executives to be upbeat about 2013,” said Hogan of the coming battle over raising the debt ceiling, which was put off as lawmakers reached a last-minute deal to avert steep spending cuts and tax increases known as the fiscal cliff.
Kate Gibson is a reporter for MarketWatch, based in New York.
