U.S. Stocks Rise in S&P 500’s Best Week Since March

U.S. stocks rallied, driving the Standard & Poor’s 500 Index to its best weekly gain since March, as earnings from Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) to AT&T Inc. (T) beat forecasts and Federal Reserve Chairman Ben S. Bernanke said he’s ready to do more to stimulate the economy if needed.

Gauges for phone stocks, consumer discretionary and technology companies advanced the most among 10 groups in the S&P 500, jumping at least 2.4 percent. An index tracking homebuilders surged 10 percent to the highest level since 2008 amid better-than-estimated housing data and PulteGroup Inc. (PHM)’s narrower loss. Apple rallied 5.2 percent after profit almost doubled while Amazon.com surged 19 percent.

The S&P 500 rose 1.8 percent to 1,403.36 for the biggest weekly advance since March 16. The Dow Jones Industrial Average gained 199.05 points, or 1.5 percent, to 13,228.31.

Earnings “look really strong, but that is definitely a management of expectations by companies,” Gary Flam, who helps oversee $6.7 billion for Bel Air Investment Advisors LLC in Los Angeles, said in a telephone interview. “If economic data weakens, QE3 or some type of response from the Fed can be expected. That’s also giving investors some confidence,” he said, referring to a third round of stimulus measures known as quantitative easing.

The Fed on April 25 upgraded its estimates for growth and unemployment this year while repeating its view that borrowing costs are likely to remain “exceptionally low” at least through late 2014. Signed contracts to buy U.S. homes increased more than forecast in March, a sign that the housing market may be reaching bottom after a six-year price slump.

13th Quarter

Equities rallied for a second week, extending the benchmark index’s 2012 gain to 12 percent, as S&P 500 companies are on pace to beat analysts’ profit estimates for a 13th straight quarter. About 75 percent of the 271 companies in the S&P 500 that reported results since April 10 have topped analysts’ projections, according to data compiled by Bloomberg.

Per-share profits are forecast to have grown 5.3 percent in the first quarter, Bloomberg data show. That’s up from the 0.8 percent growth projection before the earnings season started.

“We came into the quarter with this very negative expectation from a macro perspective about what’s going on globally and what’s going on in the economy,” David Spika, who helps oversee $14 billion as an investment strategist at Westwood Holdings Group Inc. in Dallas, said in an April 24 telephone interview. “We see the economy doing much better than expected and that resulted in better earnings. As long as the positive trend stays in place, you will see a positive trend in earnings growth.”

Apple, Amazon.com

Apple rose 5.2 percent to $603. Demand from Chinese consumers helped Apple sell a higher-than-predicted 35.1 million iPhones last quarter. The results eased concerns that had cut the company’s shares 12 percent in two weeks.

The S&P 500 Consumer Discretionary Index (S5COND) gained 2.8 percent to a record level. Amazon.com jumped 19 percent to $226.85. The world’s largest Internet retailer beat analysts’ first-quarter revenue and earnings estimates, led by demand for Kindle devices and e-commerce services for outside vendors.

Expedia Inc. (EXPE) soared 26 percent to $40.31 for the biggest increase in the S&P 500. The online travel agency reported first-quarter earnings excluding some items of 26 cents a share, beating the average analyst estimate by 90 percent, the most since at least 2005, data compiled by Bloomberg show.

Homebuilders Rally

PulteGroup advanced 20 percent to $10.07. The largest U.S. homebuilder by revenue reported a narrower first-quarter loss as it reduced costs and sold houses at higher prices. D.R. Horton Inc., the biggest by volume, climbed 7.4 percent to $16.51 after second-quarter profit beat analyst estimates.

A gauge of phone companies in the S&P 500 surged 4.4 percent to its highest level since July. AT&T rallied 5.9 percent to $32.67 as earnings beat estimates on lower smartphone upgrade costs and an increase in wireless data sales related to Apple’s iPad.

Boeing Co. (BA) jumped 5.1 percent to $77.27. Earnings beat estimates after the company delivered more commercial jets while pushing production to record levels.

A group of companies that sell necessities were the only loser among the 10 S&P 500 industry groups, falling 0.2 percent. Procter & Gamble Co. (PG), the world’s largest consumer-products company, dropped 4.6 percent, the most since September, to $64.44 after reducing its earnings forecast, hurt by regulations in Venezuela and slowing sales shipments in some developed markets.

Wal-Mart Under Probe

Wal-Mart Stores Inc. (WMT) slid 5.5 percent to $59.03 for the biggest retreat in the Dow. Mexico started a preliminary criminal investigation of Wal-Mart de Mexico SAB executives following allegations they bribed local officials to speed up the awarding of permits for new stores, the Attorney General’s Office said.

United Parcel Service Inc. (UPS), the biggest package-delivery company package considered a proxy for the economy, declined 2.3 percent to $78.44, after first-quarter profit trailed analysts’ estimates amid slowing growth in overseas shipping. Caterpillar Inc. (CAT), the world’s largest maker of construction, fell 2.9 percent to $104.56, as revenue missed projections after sales fell in China and Brazil.

Netflix Inc. (NFLX) plunged 21 percent, the most in the S&P 500, to $83.74. The world’s largest video-subscription service projected slower growth in the number of U.S. streaming customers.

-- Editors: Jeff Sutherland, Stephen Kleege

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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

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