U.S. stocks advanced, with benchmark indexes rallying the most in two weeks, on higher-than-estimated results at Boeing Co. and Yahoo! Inc. and speculation the Federal Reserve will inject more money into the economy.
Boeing climbed 3.4 percent after also raising its full-year earnings projections. Yahoo! rose 2 percent after third-quarter profit beat analysts’ estimates. Freeport-McMoRan Copper & Gold Inc. added 2.8 percent, leading a measure of raw-materials producers to the biggest gain among 10 industries in the Standard & Poor’s 500 Index.
The S&P 500 rose 1.1 percent to 1,178.17 at 4 p.m. in New York, maintaining gains after the Fed said in its Beige Book business survey that U.S. economic growth showed little sign of acceleration last month, fueling speculation it will boost purchases of government debt. The Dow Jones Industrial Average increased 129.35 points, or 1.2 percent, to 11,107.97.
“The Beige Book reiterates the call for quantitative easing,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. “The economy is growing, just not accelerating. It remains to be seen what ultimately the Fed buying of bonds will do. For now, we get stock investors reacting positively to that.”
The S&P 500 dropped the most since August yesterday as Apple Inc. forecast profit that fell short of predictions, China raised interest rates and after people familiar with the matter said bondholders are seeking to make Bank of America Corp. repurchase soured mortgages that were packaged into $47 billion of bonds.
The S&P 500 has climbed 3.2 percent this month, following an 8.8 percent September rally, as Fed policy makers indicated a readiness to pump more cash into the economy to protect the recovery by buying Treasury securities, a tactic known as quantitative easing.
“Companies are for the most part beating their numbers this earnings season,” said Scott Armiger, who helps manage about $5.6 billion at Christiana Bank & Trust in Greenville, Delaware. “We’re back to the trend of a weaker dollar on the expectation that the Fed is going to initiate a second round of quantitative easing.”
The dollar slid the most against the euro since July and touched a 15-year low versus the yen amid speculation the Fed will ease monetary policy. The economy showed expanded at a “modest” pace in September and early October and companies are still hesitant to hire, the Fed said in its regional business survey today.
Per-share earnings have topped estimates at 62 of the 74 companies in the S&P 500 that reported results since Oct. 7, according to data compiled by Bloomberg. Net income has grown 54 percent for the group as sales increased 6.7 percent.
“Notwithstanding the likes of Apple and IBM, yesterday continued the positive run of earnings we have seen so far this reporting season,” Gary Jenkins, head of fixed income at Evolution Securities Ltd. in London, wrote in a note.
Boeing, the largest aerospace company, climbed 3.4 percent to $71.36. Net income was $837 million, or $1.12 a share, compared with a net loss of $1.56 billion, or $2.23, a year earlier. Profit beat the average analyst estimate of $1.07 as compiled by Bloomberg. Sales rose 1.7 percent to $17 billion, exceeding analysts’ $16.8 billion prediction. Boeing shipped more 737s, as well as 777s, after receiving replacements for faulty seats, bolstering revenue from airlines.
Yahoo! Inc. added 2 percent to $15.80. The most-visited U.S. Web portal late yesterday said third-quarter net income more than doubled to $396.1 million, or 29 cents a share. Yahoo gained 13 cents a share from the sale of its HotJobs site and had a 4-cent benefit a year earlier from an investment in Alibaba.com. Analysts had estimated 15 cents on average, according to Bloomberg data.
The company predicted fourth-quarter sales of $1.13 billion to $1.23 billion. Analysts had estimated sales of $1.25 billion.
Monster Worldwide Inc., the world’s largest online recruiting company, rose the most in the S&P 500, gaining 6.5 percent to $13.87. Rival Manpower Inc. reported third quarter earnings that beat analysts’ estimates and its shares increased 3.5 percent to $56.76.
Freeport-McMoRan Copper & Gold, the world’s biggest publicly traded copper producer, advanced 2.8 percent to $95.35, leading a materials gauge in the S&P 500 to a 2 percent gain. DuPont Co., the third-largest U.S. chemical maker, increased 2.4 percent to $47.08 for the second-biggest gain in the Dow.
Demand for Commodities
“Materials producers are fueled by movements in the dollar and China’s decision to raise interest rates,” said Caesar Bryan, who manages $730 million in the GAMCO Gold Fund Inc. “The Chinese wouldn’t be raising rates if growth was very weak, so the move may be confirmation that there will be continuing demand for many of these commodities.”
Boston Scientific Corp. jumped the second-most in the S&P 500, rallying 5.5 percent to $6.30. The second-biggest heart-device maker by revenue reported a third-quarter profit as sales of its key heart-rhythm devices matched the upper range of analysts’ estimates.
Wells Fargo & Co. gained 4.3 percent to $25.60, leading a rebound in a measure of financial companies in the S&P 500, which rose 1.1 percent. The largest U.S. home lender reported record third-quarter profit of 60 cents a diluted share as credit conditions improved and said it’s “eager” to return capital to shareholders. Analysts surveyed by Bloomberg estimated profit of 56 cents.
Delta Air Lines Inc. jumped 11 percent to $12.97. The world’s second-largest airline and the first of the major U.S. carriers to release results posted a profit excluding certain costs of $1.10 a share, beating the 94-cent average of 13 estimates compiled by Bloomberg, as demand boosted fare prices.
Eli Lilly & Co. dropped 3.8 percent to $36.01 as the drugmaker, along with partners Amylin Pharmaceuticals Inc. and Alkermes Inc., failed to win approval for the second time from U.S. regulators for a once-weekly version of the injectable diabetes drug Byetta.
J. Crew Group Inc. fell 5.1 percent to $33.12. Needham & Co. cut third and fourth quarter profit estimates for the U.S. clothing retailer.