U.S. Stocks Rise on Commodities Rally, Europe Support Pledge

U.S. Stocks Fluctuate
A trader works on the floor of the New York Stock Exchange. Photographer: Michael Nagle/Bloomberg

U.S. stocks rose, extending a seven-week rally, as gains in commodity producers and a pledge by European finance chiefs to support the region overshadowed lower-than-estimated profit at Citigroup Inc. and Steve Jobs’s leave of absence at Apple Inc.

Alcoa Inc. and Exxon Mobil Corp. rose at least 1.1 percent as the U.S. dollar fell, sending commodity prices higher. Boeing Co. rose 3.4 percent after the seventh postponement of the 787 Dreamliner matched the length projected by some analysts. Citigroup fell 6.4 percent after revenue from stock and bond trading fell more than at JPMorgan Chase & Co. Apple slumped 2.3 percent as Chief Executive Officer Steve Jobs went on leave because of his health.

The Standard & Poor’s 500 Index rose 0.1 percent to 1,295.02, its highest level since Aug. 28, 2008, at 4 p.m. in New York. The Dow Jones Industrial Average rose 50.55 points, or 0.4 percent, to 11,837.93.

“Investors seem to be absorbing the news out of Citigroup and Apple,” said Quincy Krosby, chief market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees $690 billion. “In Europe, finance leaders put a sort of firewall to contain the spread of the debt crisis. We don’t know how long it’s going to last, but it seems to be working. The markets are responding accordingly.”

Performance Since 1928

The S&P 500 has advanced for seven straight weeks through Jan. 14, the longest rally since May 2007. Since 1928, gains of that length for the S&P 500 were followed by an average rally of 0.8 percent in the eighth week and 1.3 percent over a month, data compiled by Bespoke Investment Group LLC showed.

European stocks rose today as the euro-area finance ministers vowed to strengthen the safety net for debt-strapped countries yesterday, examining ways to give the 750 billion-euro ($1 trillion) rescue fund more flexibility without ruling out boosting its size. The euro appreciated to a one-month high against the dollar.

Energy and raw-materials producers gained as the weaker dollar boosted the appeal of commodities as an alternative investment. Alcoa, the largest U.S. aluminum producer, gained 1.9 percent to $16.27. Exxon, the largest energy company, added 1.1 percent to $78.71.

Boeing led the gains in the Dow average, rising 3.4 percent to $72.47. The company pushed back the 787 Dreamliner’s entry into service for the seventh time, to the third quarter, more than three years behind the original delivery schedule for the composite-plastic jet. The delay is “in line with general consensus expectations,” Peter Arment, an analyst with Gleacher & Co. Securities, said in an interview. Arment, who is based in Greenwich, Connecticut, recommends buying the shares.

Industrial Companies

Industrial companies in the S&P 500 climbed 0.6 percent as a group. Manufacturing in the New York region accelerated in January, propelled by gains in orders and sales that signal factories will keep contributing to the expansion.

The Federal Reserve Bank of New York’s general economic index rose to 11.9 from a revised 9.9 in December. Economists projected an increase to 12.5, based on the median forecast in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut.

Symantec Corp. gained 4 percent to $18.22. The world’s largest maker of computer security software was raised to “buy” from “hold” at Deutsche Bank AG.

Citigroup slumped 6.4 percent to $4.80. The third-largest U.S. bank posted $1.1 billion in charges related to tightening of the bank’s credit spreads. The company earned 4 cents a share, excluding certain items, missing the average analyst estimate by 48 percent.

IBM, Apple

International Business Machines Corp. and Apple were among other companies reporting results today.

After the close of regular trading, IBM reported fourth-quarter profit of $4.18 a share. The average estimate of analysts surveyed by Bloomberg was for earnings of $4.08 a share. The shares, which gained 0.4 percent to $150.65, rose 2.2 percent to $154.02 in after-hours trading.

Apple declined 2.3 percent to $340.65. Jobs took leave as his health deteriorates from battling a rare form of cancer and the liver transplant he had almost two years ago, according to a person with knowledge of the situation.

‘Corporate Setback’

“It’s a corporate setback and a negative for the stock,” said Michael Yoshikami, who owns the stock and oversees $1 billion at YCMNet Advisors in Walnut Creek, California. “Investors may be less negative this time because we’ve been down the road before, and Apple probably has its product replacement cycle set for the next two years.”

After the close, Apple reported first-quarter earnings of $6.43 a share. The average analyst estimate in a Bloomberg survey was $5.41. The shares rose 1.4 percent to $345.30 at 6 p.m. in after-hours trading.

Comerica Inc. declined 8.3 percent to $38.74. The Dallas-based bank that posted annual profits throughout the financial crisis agreed to buy Houston-based lender Sterling Bancshares Inc. for about $1.03 billion in stock. Sterling investors will receive 0.2365 Comerica shares for each share they own. Sterling Bancshares rallied 16 percent to $8.93.

U.S. stocks are within a week of “a significant market top” that is likely to precede a drop of at least 11 percent in the S&P 500, said Tom DeMark, creator of a set of market-timing indicators. DeMark’s Sequential and Combo indicators, designed to identify market tops and bottoms, are giving a sell signal on the main U.S. stock benchmark for the first time since mid-2007, he said in a telephone interview.

“I’m pretty confident that in one to two weeks, the market will be in a descent,” said DeMark, founder and chief executive officer of Market Studies LLC. “It could be pretty sharp.”

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