U.S. Stocks Rise as Housing Data Overshadow Intel, IBM

Oct. 17 (Bloomberg) -- Bloomberg’s Trish Regan, Josh Lipton and Adam Johnson report on today’s ten most important stocks including CSX, Facebook and Bank of America. (Source: Bloomberg)

U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third straight day, as a jump in housing starts overshadowed disappointing results from International Business Machines Corp. (IBM) and Intel Corp.

PulteGroup Inc. (PHM) and D.R. Horton Inc. jumped more than 4.2 percent as homebuilders rallied. Dean Foods Co. (DF) soared 13 percent after its WhiteWave Foods Co. filed to go public. Intel fell 2.5 percent after forecasting a fourth-quarter gross margin that missed estimates. IBM slid 4.9 percent after reporting third-quarter revenue that trailed analysts’ projections.

The S&P 500 (SPX) rose 0.4 percent to 1,460.91 at 4 p.m. in New York. The index has gained 2.3 percent this week. The Dow Jones Industrial Average added 5.22 points, or less than 0.1 percent, to 13,557 today. IBM, which accounts for more than 11 percent of the share-price-weighted Dow, took 80 points off the gauge today. About 6.3 billion shares traded hands on U.S. exchanges, 5.1 percent above the three-month average.

“The housing number was amazing,” Randall Warren, who oversees $75 million as chief investment officer of Warren Financial Service in Exton, Pennsylvania, said in a phone interview. “Corporate earnings have been strong in a slow growth environment, so if housing can help improve the economy then we could see a move up in stocks.”

U.S. equities rose as Commerce Department figures showed new-house construction jumped 15 percent to an 872,000 annual rate last month, the most since July 2008 and exceeding all forecasts in a Bloomberg survey of economists. The median estimate of 81 economists surveyed by Bloomberg called for 770,000.

Homebuilders Rally

An S&P gauge of 11 homebuilder stocks rose 3.2 percent. PulteGroup, the largest U.S. homebuilder by revenue, jumped 5.3 percent to $17.44. D.R. Horton gained 4.2 percent to $21.54, while Lennar Corp. (LEN) climbed 2.2 percent to $38.13.

The S&P 500 has rallied 16 percent this year and is about 7 percent below its all-time high of 1,565.15 reached in October 2007. More than 80 companies in the S&P 500 release results this week, according to data compiled by Bloomberg. Of the 73 companies in the equity benchmark that have reported since Oct. 9, 54 have posted earnings that exceeded analyst estimates, data compiled by Bloomberg show.

Utilities, financial and energy shares had the biggest gains among 10 groups in the S&P 500, climbing at least 1.1 percent. Technology shares had the largest decline, tumbling 0.8 percent as a group.

PC Purchases

Intel, the world’s largest semiconductor maker, dropped 2.5 percent to $21.79. Profit (INTC) is being crimped by expenses to slow factory output and combat rising inventories. Corporate customers are showing “caution” in placing orders and consumers in developed markets are curtailing PC purchases, Chief Financial Officer Stacy Smith said in a statement.

The Santa Clara, California-based company projected gross margin, the only profit measure it forecasts, of about 57 percent. That’s less than the 61.4 percent average estimate, according to data compiled by Bloomberg.

IBM dropped 4.9 percent, the most since October 2009, to $200.63 after the world’s biggest computer-services provider reported revenue that dropped 5.4 percent to $24.7 billion. That missed the $25.4 billion median analyst estimate, according to data compiled by Bloomberg. IBM customers, hurt by anemic demand in home markets, put off software purchases and computer- maintenance contracts.

Bank Earnings

Bank of New York Mellon Corp. (BK) advanced 5.5 percent to $24.86. The world’s largest custody bank said third-quarter earnings climbed a bigger-than-estimated 11 percent as rising stock prices helped expand customer assets. U.S. Bancorp added 1.8 percent to $34.20 after the nation’s biggest regional lender said profit climbed to a record, beating analyst estimates, as mortgage-banking revenue more than doubled.

Dean Foods rose 13 percent to $16.96. Its WhiteWave Foods Co., the maker of Silk almond milk, filed to raise as much as $320 million in a U.S. initial public offering.

Facebook Inc. (FB) climbed 2.1 percent to $19.88 after a research report said the social network owner is showing signs of success in a push to make money from mobile users. The company is “further along in monetizing mobile advertising” than is generally believed, according to Martin Pyykkonen, an analyst at Wedge Partners Corp. Through yesterday, the stock had fallen 49 percent since its May 17 initial public offering.

Cymer Surges

Cymer Inc. (CYMI) jumped 49 percent to $71.45 after ASML Holding NV (ASML) agreed to buy the maker of lasers used to manufacture computer chips for $2.6 billion. Cymer investors will receive $20 in cash and 1.1502 of ASML’s ordinary shares for every Cymer share they hold, ASML said in a statement today. The price is 72 percent more than San Diego-based Cymer’s close in New York yesterday.

Apollo Group Inc. (APOL) tumbled 22 percent to $21.40. The largest U.S. for-profit college chain forecast revenue for fiscal 2013 that missed analysts’ estimates and said it would close campuses and cut jobs.

CSX Corp. (CSX) declined 2 percent to $21.19 after predicting two of its biggest markets, coal and agriculture shipments, would be depressed this quarter by the U.S. drought and competition from cheap natural gas.

The biggest eastern U.S. railroad expects unfavorable conditions for a third of its businesses, driving a “neutral outlook” for the three months through December, Chief Commercial Officer Clarence Gooden said. The carrier also predicted headwinds in food and consumer and emerging markets cargoes.

Cessna Jets

Textron Inc. (TXT) fell 5.7 percent, the most in almost 14 months, to $24.95, after missing analysts’ third-quarter profit estimates as the company sold fewer new Cessna business jets.

President Barack Obama and Republican challenger Mitt Romney met in a nationally televised debate last night. The showdown had gained added significance after a majority of voters said Obama lost to Romney in their first debate on Oct. 3. Romney has since gained in national and state polls.

A USA Today/Gallup poll released this week gave Romney a 50 percent to 46 percent edge among likely voters in the 12 states that strategists in both parties say will decide who wins the White House on Nov. 6.

“The presidential race remains extremely close, according to polls following the latest debate,” Barclays Plc’s Laurent Fransolet and Paul Robinson wrote in a note to clients today. “The induced uncertainty remains an issue for markets, though not as important as the eurozone developments, so far at least.”

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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