U.S. stocks rose, reversing losses and sending the Standard & Poor’s 500 Index to the highest level since June 2008, after the unemployment rate unexpectedly dropped and more companies beat earnings estimates.
Tyson Foods Inc., the largest U.S. meat processor, and JDS Uniphase Corp., the nation’s biggest network-analysis company, advanced at least 5.6 percent as profits beat analyst estimates. Aetna Inc., the health insurer whose earnings also exceeded projections, jumped 12 percent after raising its dividend. Research In Motion Ltd. added 1.6 percent after Morgan Stanley raised its stock rating for the maker of BlackBerry smartphones.
The S&P 500 rose 0.3 percent to 1,310.87 at 4 p.m. in New York. The benchmark gauge has risen 2.7 percent since Jan. 28, snapping two weeks of declines. The Dow Jones Industrial Average increased 29.89 points, or 0.3 percent, to 12,092.15. Earlier today, stocks fell as concern grew that Egyptian riots may intensify over the weekend.
“It’s just a slow and steady recovery,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York, which manages $2 billion. “Things are improving,” he said. “This market has been resilient through the Egyptian crisis. That strength has to do with better U.S. fundamentals.”
The S&P 500 has risen 94 percent from its March 2009 low, the biggest rally over equivalent time periods since 1936, amid government efforts to stimulate the economy and higher-than- estimated corporate profits. Almost three-quarters of the 287 companies in the S&P 500 that have reported quarterly earnings since Jan. 10 have topped analysts’ projections for per-share profit, according to data compiled by Bloomberg.
The U.S. jobless rate unexpectedly fell to 9 percent in January, the lowest level since April 2009, while payrolls rose less than forecast, depressed by winter storms. Employers added 36,000 workers, the smallest gain in four months, after a 121,000 rise in December that was larger than initially reported. Payrolls were projected to climb 146,000, according to the median economist forecast in a survey.
The Federal Reserve is unlikely to raise interest rates for at least 12 months because the U.S. economy isn’t generating enough growth to lower unemployment, Pacific Investment Management Co.’s Bill Gross said. The Fed would probably like to see the economy adding at least 200,000 jobs a month before considering rate increases, Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene.
“While we expect the unemployment rate to get better, we don’t see miracle growth,” said Tim Evnin, equity portfolio manager at Evercore Wealth Management, which has $2.5 billion under management. “Between weather and revisions, there are too many crosscurrents. It’s going to start getting better at some point in time, but sort of remains to be seen.”
Equities also turned lower earlier today as yields on 10- and Treasuries surged to the highest level in nine months, spurring concern that higher borrowing costs will slow the economic rebound.
“Bottom line, higher rates do hurt stock prices,” said Joseph Saluzzi, co-head of equity trading at Themis Trading LLC in Chatham, New Jersey. “Good economic news could potentially now be bad for stocks because it could send interest rates up.”
Stocks also fell earlier today as unrest in Egypt continued. Protests poured out of prayer services and filled Cairo’s Tahrir Square on what demonstrators called the “day of departure” for President Hosni Mubarak. Tens of thousands gathered to sing the national anthem and chant slogans against Mubarak, repeatedly calling the president and his regime “illegitimate.” One held a sign reading: “Game Over.”
Tyson Foods gained 5.7 percent to $18.56. The largest U.S. meat processor reported fiscal first-quarter profit that beat analysts’ estimates as pork and chicken income increased. Excluding a 3-cent gain from the sale of interests in an investment, profit was 75 cents, topping the 62-cent average estimate of 15 analysts in a Bloomberg survey. Sales rose 15 percent to $7.62 billion from $6.64 billion.
JDS Uniphase jumped 25 percent to $22.34 after the company beat analysts’ projections for second-quarter per-share earnings excluding some items by 49 percent. Third-quarter revenue will be $440 million to $460 million, the company said. Analysts projected $420.9 million, on average.
Aetna increased 12 percent to $37.42. The third-biggest U.S. health insurer said its board approved a quarterly cash dividend of 15 cents a share. The company previously paid a dividend of 4 cents annually. Aetna today reported fourth- quarter profit of 63 cents a share on an operating basis, topping the average analyst estimate of 62 cents.
Research In Motion rose 1.6 percent to $63.69. The maker of the BlackBerry smartphone was raised to “equal-weight” from “underweight” at Morgan Stanley.
Las Vegas Sands Corp. declined 8.5 percent to $46.03. The U.S. casino company expanding in Asia posted fourth-quarter sales that missed analyst estimates.
U.S. Steel Corp., the country’s largest producer of the metal by volume, dropped 4.1 percent to $58.17. AK Steel Holding Corp. declined 3 percent to $15.84. UBS AG said both companies may be hurt most by lower prices.
Coinstar Inc. slumped 12 percent to $38.96. The operator of the Redbox DVD rental machines forecast first-quarter earnings from continuing operations of no more than 25 cents a share. Analysts projected an average of 57 cents a share, according to data compiled by Bloomberg.
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