Stocks Advance Behind Energy, Tech Shares

By Nikolaj Gammeltoft -

U.S. House Speaker John Boehner (R-OH), right, listens as U.S. House Majority Leader Eric Cantor (R-VA), center, answers questions during a press conference on a balanced budget amendment at the U.S. Capitol July 14, 2011 in Washington, DC. Photographer: Win McNamee/Getty Images

U.S. stocks rose, trimming the Standard & Poor’s 500 Index’s weekly loss, as gains in energy and technology shares were enough to overcome concern that an impasse over raising the federal debt limit is putting the nation’s top credit rating in jeopardy.

Google Inc. (GOOG) jumped 13 percent after reporting sales that beat predictions, a sign that it’s making progress expanding beyond search advertising. Petrohawk Energy Corp. (HK) rallied 62 percent as BHP Billiton Ltd. agreed to buy the oil and gas company for $12.1 billion in cash. Gauges of energy stocks and technology companies advanced at least 1.5 percent. Clorox Co. (CLX) rose 8.9 percent after Carl Icahn offered to buy the company.

The S&P 500 rose 0.6 percent to 1,316.14 at 4 p.m. in New York. The gauge fell 2.1 percent this week. The Dow Jones Industrial Average added 42.61 points, or 0.3 percent, to 12,479.73 today.

“There’s a lot more company-specific issues driving stocks now, even though there’s still macro uncertainty about the debt negotiations in Washington and the European crisis,” Jeffrey Coons, president of Manning & Napier Advisors Inc. in Fairport, New York, said in a telephone interview. His firm manages $44 billion.

Stocks lost their gains this morning amid concern negotiations toward raising the U.S. debt ceiling are failing to progress. House Speaker John Boehner, a Republican from Ohio, told reporters that his party wouldn’t accept any tax increases as they work with President Barack Obama on a deal to lower deficits and possibly raise the U.S. debt limit. Moody’s Investors Service and S&P said this week that they may cut the federal government’s credit rating if the issue isn’t resolved.

Higher Rates

Obama said a failure to raise the U.S. debt limit would trigger a default on the nation’s obligations that could drive up interest rates for everyone in the country.

“We could end up with a situation where interest rates rise for everyone,” he told a Washington press conference. In effect, it would be “a tax increase for everybody.”

The S&P 500 rallied 93 percent from its low in March 2009 through yesterday as the Federal Reserve used large-scale asset purchases to buoy the economy and companies posted earnings that beat analysts’ estimates. Of the 13 S&P 500 companies that have posted results so far this earnings season, 11 have beaten forecasts for per-share profit.

Stocks fell from their highs of the day after the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 63.8 in July from 71.5 the prior month. The gauge was projected to rise to 72.2, according to the median forecast of 62 economists surveyed by Bloomberg News. Estimates for the confidence measure ranged from 75 to 68. The index averaged 89 in the five years leading up to the recession that began in December 2007.

Stress Tests

Stocks briefly extended their advance after the European Banking Authority said eight banks failed the European Union stress tests with a combined capital shortfall of 2.5 billion euros ($3.5 billion).

Agricultural Bank of Greece SA, Austria’s Oesterreichische Volksbanken AG and Spain’s Banco Pastor SA were among the failures. The companies were found to have insufficient reserves to maintain a core tier 1 capital ratio of 5 percent in the event of an economic slowdown, the European Banking Authority said. All banks tested in Italy, Germany and the U.K. passed.

“The stress test results are coming in pretty much as expected, at least at the headline level,” E. William Stone, who helps oversee about $110 billion as chief investment strategist at PNC Wealth Management in Philadelphia, said in a telephone interview. “Everybody is waiting for more news on the U.S. debt ceiling and more about the EU sovereign debt situation, and nobody wants to get too far on one side or the other ahead of the weekend.”

Google, Clorox

Google soared 13 percent to $597.62, its biggest gain since October 2008. Sales, excluding revenue passed on to partner sites, rose to $6.92 billion. That topped the $6.57 billion average estimate of analysts surveyed by Bloomberg.

Clorox advanced 8.9 percent to $74.55, its highest price since at least 1980. Icahn, a billionaire, offered to buy the maker of the namesake bleach for about $10.2 billion in a move designed to draw out other potential bidders.

Petrohawk Energy rallied 62 percent to $38.17. BHP Billiton, the world’s largest mining company, agreed to buy the company for about $12.1 billion in cash in its biggest acquisition, betting natural gas demand will gain in the U.S.

Chesapeake Energy Corp. (CHK) climbed 9.1 percent to $32.96. The natural-gas driller would be worth $58 a share should it be taken over based on the valuation of the Petrohawk acquisition, Ticonderoga Securities LLC said in a note.

Energy Stocks

Energy companies rose 2.3 percent, the most among 10 industries in the S&P 500. Technology stocks added 1.6 percent as a group.

Ralcorp Holdings Inc. (RAH) fell 0.7 percent to $86, dropping for a sixth straight day. The maker of Raisin Bran cereals and private-label food brands plans to spin off Post Foods after failing to sell the unit to rival foodmakers or private-equity firms.

Flir Systems Inc. (FLIR) fell the most in the S&P 500, slumping 9.9 percent to $28.92. The maker of night-vision cameras used by U.S. combat forces reported second-quarter profit excluding some items of 35 cents a share, trailing the average analyst estimate by 4 cents, according to Bloomberg data.