BLBG: S&P 500 Rises Above 1,500 as Earnings, Jobs Offset Apple
U.S. stocks rose, briefly sending the Standard & Poor’s 500 Index above 1,500 for the first time since 2007, as an unexpected drop in jobless claims and better- than-forecast earnings offset a slump in Apple Inc. (AAPL)
Netflix Inc. (NFLX) surged 38 percent as the world’s largest online-video service beat its forecast for fourth-quarter subscriber growth and posted an unexpected profit. Xerox Corp. jumped 4.4 percent after posting earnings that topped estimates. Apple, the world’s most valuable company, slid 10 percent after reporting the slowest profit growth since 2003 and weakest sales increase in 14 quarters.
The S&P 500 rose 0.3 percent to 1,499.31 at 10:14 a.m. in New York. The benchmark index has climbed for seven days, the longest winning streak since 2006. The Dow Jones Industrial Average gained 74.34 points, or 0.5 percent, to 13,853.67 today. Trading in S&P 500 companies was 21 percent above the 30-day average at this time of day.
“People are just trying to digest all the earnings reports from all the various companies,” said Giri Cherukuri, portfolio manager who helps manage $3 billion at Oakbrook Investments LLC in Lisle, Illinois. “As long as the economy seems to get better the stock market will do well.”
U.S. stocks rose yesterday, pushing the S&P 500 0.2 percent higher, as lawmakers voted to temporarily suspend the federal debt limit and Google Inc. (GOOG) and International Business Machines Corp. reported better-than-forecast earnings. The benchmark equity gauge is up 5.2 percent this year.
Earnings Season
Some 75 percent of the 134 companies in the S&P 500 that have released results so far exceeded profit projections, according to data compiled by Bloomberg. Analysts on average forecast growth of 3.8 percent in fourth-quarter profit, the data show.
A report today showed claims for jobless benefits in the U.S. unexpectedly dropped last week. Applications for unemployment insurance payments decreased by 5,000 to 330,000 in the week ended Jan. 19, the fewest since the same week in 2008, the Labor Department reported in Washington. Economists forecast 355,000 claims, according to the median estimate in a Bloomberg survey.
A separate release showed the index of leading economic indicators, a gauge of the outlook for the next three to six months, climbed 0.5 percent last month after being revised to unchanged in November, signaling the world’s largest economy is poised to keep growing through the first half of this year.
China Growth
In China, manufacturing expanded at the fastest rate in two years, according to a survey of companies. The preliminary reading of their purchasing managers’ index rose to 51.9 in January, from 51.5 in December, HSBC Holdings Plc and Markit Economics said today. That compares with the median estimate of 51.7 in a Bloomberg survey. HSBC and Markit will report their final reading for January on Feb. 1.
Netflix soared 38 percent to $142.42. The company signed 2.05 million new U.S. Internet subscribers in the fourth quarter, bringing total domestic online customers to 27.2 million, it said yesterday on its website. The gain led to a quarterly profit of 13 cents a share, compared with analysts’ predictions of a loss.
Xerox rallied 4.4 percent to $7.91. The provider of document and business services reported earnings that beat analyst expectations as the company shifts away from its traditional printing business. Earnings excluding some items were 30 cents a share, above the average analyst estimate of 29 cents.
Apple Tumbles
Apple fell 10 percent to $460.58. The results reinforce concern that the company’s growth is being hurt by higher production costs and step up pressure on Chief Executive Officer Tim Cook to demonstrate that Apple has more blockbuster products in the pipeline to reignite sales. The shares have fallen 27 percent since they set a record in September.
Profit rose less than 1 percent to $13.1 billion, or $13.81 a share, in the period that ended Dec. 29. Sales rose 18 percent to $54.5 billion, falling short of $54.9 billion, the average analyst estimate compiled by Bloomberg. Analysts had predicted profit of $13.53 a share.
For the fiscal second quarter, which is now under way, Apple forecast sales of $41 billion to $43 billion, compared with predictions by analysts for revenue of $45.5 billion.
To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Sarah Pringle in New York at springle1@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
