U.S. Stocks Fluctuate on Economic Reports, Greece Bailout Talks
By Rita Nazareth
March 18 (Bloomberg) -- U.S. stocks fluctuated as a drop in jobless claims and no change in consumer prices added to evidence the economy is recovering without stoking inflation, offsetting concerns a European bailout of Greece may fall apart.
DuPont Co. and Alcoa Inc. led gains in Dow Jones Industrial Average stocks after government reports showed initial unemployment claims dropped by 5,000 last week and the consumer price index was unchanged. Nike Inc. climbed 4.9 percent after saying profit more than doubled, while FedEx Corp. slipped as quarterly results rose less than some analyst estimated.
The Standard & Poor’s 500 Index lost less than 0.1 percent to 1,165.53 at 11:09 a.m. in New York. The Dow gained 29.17 points, or 0.3 percent, to 10,762.84 after closing at the highest level since October 2008 yesterday.
“Both CPI and jobless claims figures were very comforting,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees $8.5 billion. “We’re seeing economic growth and that doesn’t seem to raise any flags of inflation. Therefore, interest-rates should be low for a while, which is good for the stock market. We’ve been recently watching tiny moves though, due to the good run we’ve had over the past 12 months.”
17-Month High
The S&P 500 climbed for a third straight day yesterday to extend its rally from a 12-year low last March to 72 percent. The index rose to the highest intraday level since Sept. 29, 2008, when the U.S. House of Representatives rejected a version of the $700 billion financial rescue package. The index plunged 8.8 percent that day, its biggest slide since the market crash of 1987.
Benchmark indexes briefly headed higher earlier today after gauges of leading economic indicators and Philadelphia manufacturing showed expansion.
Nike climbed 4.9 percent to $74.36. The world’s largest maker of athletic shoes said third-quarter profit more than doubled, beating analysts’ estimates, as sales increased in North America for the first time in a year. FedEx slipped 0.4 percent to $89.44. Net income for the three months ended Feb. 28 rose to $239 million, or 76 cents a share. The shipping company was projected to earn 73 cents a share, the average of 18 estimates compiled by Bloomberg. At least five analysts said in the past two weeks that FedEx may exceed their estimates or the Wall Street consensus.
GameStop, DuPont
GameStop Corp. gained 9.5 percent to $21.74. The world’s largest video-game retailer reported fourth-quarter earnings per share of $1.29. Analysts estimated $1.28 a share, based on the average estimate from a Bloomberg survey.
DuPont rose the most in the Dow, climbing 2.2 percent to $37.29. The third-largest U.S. chemical company said it expects earnings per share to grow 20 percent a year from 2009 to 2012.
Guess? Inc. climbed 3 percent to $48.09. The clothing maker reported fourth-quarter profit that topped analysts’ estimates and said it will boost its dividend by 28 percent to 16 cents a share.
Broadcom Corp. advanced 1 percent to $33.96. The maker of semiconductors for wireless headsets and television set-top boxes was upgraded to “buy” from “neutral” at Goldman Sachs Group Inc.
Burger King Holdings Inc. advanced 2.6 percent to $20.70. The second-largest U.S. hamburger seller was raised to “buy” from “hold” at Deutsche Bank AG.
Birinyi’s Picks
Stock investors should buy Google Inc. because of its growth opportunities and Goldman Sachs Group Inc. given that it’s a “well-managed company,” said Laszlo Birinyi, the founder of Birinyi Associates Inc. Birinyi said the technology industry is his favorite now. He spoke in a Bloomberg Radio interview.
Google rose 0.4 percent to $567.72, while Goldman Sachs advanced 0.3 percent to $177.09.
Greek stocks tumbled, with the benchmark ASE index down 3.5 percent, as Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for the nation as he challenges Germany to give up its doubts about a rescue package.
Papandreou said he may turn to the International Monetary Fund to overcome Greece’s debt crisis unless leaders agree to set up a lending facility at a summit March 25-26. The IMF option has already been dismissed by European Central Bank President Jean-Claude Trichet and French President Nicolas Sarkozy, who say it would show the EU can’t solve its own crises.
‘Wrong Foot’
“We started the day on the wrong foot with disappointments out of Greece and somewhat on FedEx”, said Jack Ablin, the Chicago-based chief investment officer of Harris Private Bank, which oversees about $55 billion. “Overall, the equity market is still fairly valued when looking at things like price-to- sales.”
The S&P 500 is trading at 1.29 times its companies sales, compared with an average multiple of 1.52 over the past decade.
Caterpillar Inc. fell 0.6 percent to $59.89. The world’s largest maker of construction equipment reported its rolling three-month global retail sales for its machinery and engines line of business was down 20 percent. The information was disclosed in a regulatory filing.
Athenahealth Inc. dropped 3.7 percent to $39.04. The provider of Internet-based business services for medical practices was downgraded to “underperform” from “market perform” at Oppenheimer & Co.
Bullish Signals
The Dow Jones Industrial Average yesterday rose above the midpoint of its last bull market in a positive sign for U.S. stocks, according to Richard Russell, who has studied the average since 1958.
The advance by the 30-stock Dow also was a bullish signal for followers of Dow Theory, which holds that moves by the Dow Jones Transportation Average must be “confirmed” by the industrial average, and vice versa, in order to be sustained.
A close by the Dow above the midpoint is “a big positive for equities,” Russell, the 85-year-old editor of Dow Theory Letters, said in a telephone interview yesterday. “I would probably turn somewhat bullish.”
No comments:
Post a Comment