By Rita Nazareth April 23 (Bloomberg) -- U.S. stocks fluctuated as the biggest jump in new home sales in almost five decades bolstered optimism the economy is improving, while the latest batch of earnings reports provided a mixed outlook for profits. Standard Pacific Corp. and Lennar Corp. rallied at least 5 percent to lead builders higher after purchases of new homes increased 27 percent in March, the most since April 1963, as buyers took advantage of a tax credit. American Express Co., Xerox Corp. and Johnson Controls Inc. advanced on earnings that topped analysts’ estimates, while Microsoft Corp. and Amazon.com Inc. fell as their results showed a rebound in technology and consumer spending may be less robust than analysts predicted. The Standard & Poor’s 500 Index slipped 0.1 percent to 1,207.39 at 11:28 a.m. in New York, trimming gains in its seventh weekly advance in the past eight. The Dow Jones Industrial Average decreased 3.85 points, or less than 0.1 percent, to 11,130.44 after climbing as much as 51 points. “The new-home sales numbers are just great,” said Philip Orlando, chief equity-market strategist at Federated Investors, which manages about $400 billion. “This economic recovery is sustainable and we’ll continue to see growth.” U.S. stocks advanced yesterday, erasing the biggest drop since Goldman Sachs Group Inc. was sued by the government, as investors speculated the bank will prevail and concern about financial regulation eased. Earlier losses in stocks yesterday were triggered by disappointing forecasts from health-care and technology companies and speculation that widening European government deficits will derail the economic recovery. Housing Market Purchases of new homes climbed to an annual pace of 411,000 that exceeded the highest forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed. Last month’s purchase rate was the highest since July and followed a record-low of 324,000 in February that was higher than previously estimated. A gauge of 12 homebuilders rose 4.9 percent, as Standard Pacific surged 7 percent to $6.59, while Lennar gained 5 percent to $20.72. Orders for durable goods excluding transportation surged in March by the most since the recession began in December 2007, adding to evidence the U.S. recovery is broadening. The 2.8 percent increase in bookings, excluding cars and aircraft, was four times the median forecast of economists surveyed by Bloomberg News. Total orders unexpectedly dropped 1.3 percent on a 67 percent plunge in demand for commercial aircraft. Fed Speculation The growth in orders spurred concern that the Federal Reserve may consider the economic recovery strong enough to withstand an increase in the central bank’s benchmark interest rates from a record low. “It might be possible that some are concerned about the FOMC changing it stance next week,” said Peter Jankovskis, who helps manage about $1.8 billion as co-chief investment officer at Oakbrook Investments in Lisle, Illinois. “I personally doubt it. The Fed is set to keep rates low for a while. Amazon and Microsoft’s earnings are also holding investors back.”” American Express advanced 4.6 percent to $48.90 after the biggest U.S. credit-card issuer by purchases said first-quarter profit doubled as consumers boosted spending. Xerox rose 8.2 percent to $11.31. The largest maker of high-speed color printers forecast second-quarter profit that beat analysts’ estimates as spending on its printer services rebounds. Per-share profit this quarter, excluding some costs, will be at least 20 cents. That compares with the average analyst estimate of 18 cents in a Bloomberg survey. First- quarter profit and sales also exceeded analysts’ projections. Microsoft, Amazon Microsoft dropped 1.2 percent to $31 after saying third- quarter sales rose 6.3 percent to $14.5 billion, missing the most optimistic revenue estimates, a sign that corporate customers may be putting off computer purchases. Amazon.com, the biggest online retailer, said operating income this quarter may be as low as $220 million. That missed the $322.2 million average prediction of analysts surveyed by Bloomberg, signaling its profitability may come under pressure as consumers’ tastes shift to digital books and movies. Amazon slid 3.9 percent to $144.28 in New York. Travelers Cos. retreated 1 percent to $53.27. The property insurer added to the Dow Jones Industrial Average last year said its first-quarter operating income, which excludes some investment results, was $1.22 a share, missing the $1.38 average estimate of 19 analysts surveyed by Bloomberg. About 81 percent of S&P 500 companies that have reported first-quarter results beat the average analyst earnings estimate, according to data compiled by Bloomberg, which could mark a record proportion in data going back to 1993. Earnings Season “The earnings season has been excellent,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “Profit outlooks are not too far off of what analysts were expecting. Economic reports are not only showing that we continue to come out of the recession, but we’re in a powerful recovery.” The Group of 20 industrial and developing nations meets today and is expected to discuss Greece amid concern the nation will be forced to restructure its debt. Greek Finance Minister George Papaconstantinou today sent a letter formally requesting the activation of a financial lifeline from the European Union of as much as 45 billion euros ($60 billion). To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net.

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