U.S. Stocks Advance a Third Week on Improved Economic Reports, Earnings

U.S. stocks rose for a third week, the longest winning streak since October, as better-than- estimated economic data and company earnings boosted confidence in American growth.

Technology and energy companies led rallies by nine out of 10 Standard & Poor’s 500 Index groups, climbing more than 2.7 percent. Sears Holdings Corp. added 46 percent amid speculation it may go private and optimism CIT Group Inc. will approve financing for the retailer’s vendors. Bank of America Corp. (BAC) led Dow Jones Industrial Average gains after posting a profit. International Business Machines Corp. increased 5.2 percent after forecasting earnings that beat analysts’ estimates.

The S&P 500 advanced 2 percent to 1,315.38 this week. It has gained 4.6 percent in 2012, the best start to a year since 1997. The Dow gained 298.42 points, or 2.4 percent, to 12,720.48 this week, reaching the highest level since July 21.

“The domestic economy is strong and that’s helped the stock market,” Mark Bronzo, who helps manage $23.4 billion at Security Global Investors in Irvington, New York, said in a telephone interview. “The market’s done pretty well in the face of some good earnings news and it seems to be overcoming some of the fears around Europe.”

The S&P 500 rose all four days U.S. exchanges were open this week as data bolstered confidence in the American economy. Claims for jobless benefits dropped to the lowest level since 2008 and confidence among homebuilders topped forecasts.

Earnings Season

Companies from Goldman Sachs Group Inc. to Union Pacific Corp. and EBay Inc. topped analysts’ income projections. S&P 500 companies, which beat profit estimates in the previous 11 quarters, will report a 3.4 percent increase in per-share earnings during the September-December period, analysts’ forecasts compiled by Bloomberg show. Of the 51 companies in the S&P 500 that reported results since Jan. 9, 33 posted per-share earnings that beat projections, Bloomberg data show.

Equities have advanced this year amid improving economic reports after the S&P 500 was virtually unchanged in 2011. The U.S. Citigroup Economic Surprise Index (CESIUSD), a gauge of how much reports are exceeding or missing economists’ estimates in Bloomberg surveys, rose to a 10-month high on Jan. 6.

Technology companies in the S&P 500 climbed 3.3 percent as a group, with an index of their performance closing at the highest level since February. Microsoft Corp., Intel Corp. and IBM added at least 4.9 percent as results topped projections. Hewlett-Packard Co. climbed 6.2 percent to $28.13.

Google’s Expansion

Google Inc. (GOOG), owner of the most popular Internet search engine, slumped 6.2 percent to $585.99 as fourth-quarter revenue and profit missed estimates.

Chief Executive Officer Larry Page is moving into new markets to ignite growth outside Google’s traditional search- based business. That effort contributed to an 8 percent drop in the average price Google gets when users click an ad, because it charges less for ads on mobile devices and in emerging markets, said Herman Leung, an analyst at Susquehanna Financial Group.

Sears, the retailer controlled by hedge fund manager Edward Lampert, gained 46 percent to $49 for the biggest rise in the S&P 500. Lampert, who owns about 60 percent of Sears (SHLD) and serves as chairman, may seek new capital and to reorganize operations, said Paul Swinand, an analyst with Morningstar Inc.

Sears also advanced after Women’s Wear Daily reported that CIT will approve financing for the retailer’s vendors, citing unidentified people familiar with the plan. CIT is looking for more detailed information on Sears’s financing and may require letters of credit for all orders, Women’s Wear Daily said.

Quarterly Profit

Bank of America rose 7 percent this week to $7.07, the biggest gain in the Dow. The second-largest U.S. lender by assets swung to a quarterly profit of $1.99 billion.

Goldman Sachs rose 9.9 percent to $108.74. Chief Executive Officer Lloyd C. Blankfein cut compensation 21 percent in 2011 as he reduced costs and focused on international growth to offset a slowdown in trading, which contributes most of Goldman Sachs’s revenue.

The company’s higher-than-estimated earnings contrasted with reports from Citigroup Inc. (C), which fell short of analysts’ estimates, and JPMorgan Chase & Co., which matched projections.

Carnival Corp. (CCL) tumbled 7.9 percent to $31.56. The company owns the Costa Concordia cruise ship that ran aground off the coast of Italy last week, killing at least 11 people. Carnival halted advertising for its Carnival Cruise Lines and announced a review of safety procedures in the aftermath of the accident.

Credit Suisse Group AG’s Andrew Garthwaite lifted his 2012 forecast for the S&P 500 to 1,400, citing the European Central Bank’s refinancing plans for banks as a “potential game changer.”

Garthwaite, the London-based global equity strategist at the firm, had previously estimated the S&P 500 would reach 1,340 at the end of 2012. His new forecast pushes the average projection of 12 strategists surveyed by Bloomberg News to 1,349, implying a 7.3 percent gain for the year.

To contact the reporter on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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