U.S. Stocks Advance

U.S. Stocks Advance as Intel Helps S&P 500 Extend 7-Day Rally

By Elizabeth Stanton

July 14 (Bloomberg) -- U.S. stocks rose, extending the longest rally for the Standard & Poor’s 500 Index since 2006, as Intel Corp.’s forecast of record yearly profit bolstered confidence earnings growth will justify the market’s rebound.

Intel jumped 3.3 percent as technology companies led the S&P 500 to a seventh straight advance. Cisco Systems Inc., Hewlett-Packard Co. and Microsoft Corp. climbed more than 1.2 percent to help lead gains in the Dow Jones Industrial Average.

The S&P 500 climbed 0.2 percent to 1,097.64 as of 12:09 p.m. in New York, its seventh straight advance. The gauge has rallied more than 7 percent from a 10-month low on July 2. The Dow average increased 20.28 points, or 0.2 percent, to 10,383.30.

“Intel has reach over both consumer and investment spending, and also has reach throughout the world,” said William Greiner, president and chief investment officer of Scout Investment Advisors in Kansas City, which manages $7.5 billion. Its results show that “businesses in general are making the leap toward investment spending. It’s positive from the standpoint of stock prices being fundamentally undervalued” on a historical basis relative to profits.

Benchmark indexes retreated earlier as a second straight month of declines in retail sales indicated the economic recovery moderated heading into the second half of 2010.

S&P 500 Rebounds

The S&P 500 rebounded from a 10-month low on July 2, paring its drop for the year to 1.8 percent as of yesterday, amid optimism that second-quarter earnings will overshadow disappointing home sales, manufacturing and jobs data. Analysts predict earnings in the S&P 500 grew 34 percent last quarter, according to estimates compiled by Bloomberg.

The S&P 500 plunged 16 percent between April 23 and July 2, reaching its lowest valuation relative to earnings in a year, on concern a sovereign-debt crisis in Europe is spreading and economic growth in China and the U.S. is slowing. Intel gained 3.3 percent to $21.71 for the biggest advance in the Dow average. The company, whose processors run more than 80 percent of the world’s personal computers, reported record second-quarter sales and topped analysts’ estimates with its forecast for the current period, allaying concern that a rebound in technology spending is losing steam.

Third-quarter sales will be $11.6 billion, plus or minus $400 million, the Santa Clara, California-based company said after the market closed yesterday. Analysts had estimated $10.9 billion on average, according to a Bloomberg survey. Intel said its gross profit margin will reach 66 percent this year, while its second-quarter earnings also topped estimates.

AMD, Nvidia

Advanced Micro Devices, which is due to report profit tomorrow, gained 1.1 percent to $7.61. Nvidia, the second- largest maker of graphics chips, rose 1.1 percent to $11.04.

Other technology companies also helped boost the Dow. Cisco Systems rose 3 percent to $23.78. Hewlett-Packard gained 2.4 percent to $47.88, and Microsoft Corp. advanced 1.4 percent to $25.48.

U.S. stock-index futures rose as much as 0.9 percent before exchanges opened. The gains began to erode after weekly data from the Mortgage Bankers Association showed requests for purchase financing dropped to the lowest level in more than 13 years.

Futures extended their declines after the retail sales report. Purchases decreased 0.5 percent, more than expected, following a 1.1 percent May drop, the Commerce Department said. Excluding auto dealers, demand fell 0.1 percent, matching the median forecast of economists surveyed by Bloomberg News.

Target, Home Depot

Target, the second-biggest U.S. discount retailer, fell 0.8 percent to $49.51. Home Depot, the largest U.S. home-improvement retailer, dropped 0.6 percent to $28.48.

Yum! Brands Inc. declined 2 percent to $40.69. The owner of the KFC and Taco Bell restaurant chains boosted its fiscal-year 2010 per-share profit forecast to $2.43 after markets closed yesterday, falling short of the $2.48 expected by analysts in a Bloomberg survey.

Expeditors International of Washington Inc. rose 5.2 percent to $39.10 for the biggest gain in the S&P 500. The manager of cargo ships said second-quarter profit was at least 38 cents a share, topping the 31-cent average analyst estimate.