U.S. Stocks Advance as HP Offsets Fisher Stimulus Remarks
U.S. stocks rose, rebounding from earlier losses in benchmark indexes, as a rally in Hewlett- Packard Co. offset Federal Reserve Bank of Dallas President Richard Fisher’s remark that adequate stimulus is in place.
Hewlett-Packard Co. (HPQ) rose 2.7 percent after raising its earnings forecast and appointing a new head for its enterprise services unit as it restructures the business. Dean Foods Co. surged 37 percent as its WhiteWave unit filed to raise $300 million in a U.S. initial public offering. McDonald’s Corp. slid 1.7 percent amid unchanged July global sales. Priceline.com Inc., the biggest U.S. online travel agency by market value, tumbled 16 percent on a disappointing earnings forecast.
The Standard & Poor’s 500 Index rose 0.2 percent to 1,403.75 at 11:45 a.m. New York time, after falling 0.4 percent earlier. The Dow Jones Industrial Average added 30.61 points, or 0.2 percent, to 13,199.21. Trading in S&P 500 companies was down 9.7 percent from the 30-day average at this time of day.
The S&P 500 has rebounded almost 10 percent from a five- month low on June 1. The rally brought the index to 1,401.35 yesterday, the highest level since May 2 and above 1,389, which is the average year-end forecast among Wall Street strategists.
Equities dropped earlier today as the Fed’s Fisher said global central banks may not have the capacity to undertake additional measures. Stocks rose yesterday as Fed Bank of Boston President Eric Rosengren said the central bank should pursue an “open-ended” easing program of “substantial magnitude.”
“Stimulus can’t hurt, but the problem is that it has less and less effect,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati. “Any argument by policymakers is going to pull the market in various directions, depending on what they are saying.”
Investors also watched corporate results. Almost 59 percent of S&P 500 companies which reported second-quarter sales so far have missed analysts’ estimates, Bloomberg data showed.
Hewlett-Packard rallied 2.7 percent to $19.48. Profit excluding some items in the current period will be $1, up from a prior projection of 94 cents to 97 cents, the Palo Alto, California-based company said today in a statement.
Dean Foods Co. (DF) jumped 37 percent, the most in the S&P 500, to $16.97. The proceeds will be used to pay down debt at Dallas- based Dean, according to the filing. Dean said yesterday in a statement that it will own at least 80 percent of WhiteWave’s common stock following the IPO and distribute those shares to its investors at least 180 days after the offering.
Cincinnati Bell Inc. (CBB) added 11 percent to $4.14 after proposing an initial public offering for its CyrusOne unit, a data-center operator it acquired in 2010.
Macy’s Inc. (M) rose 3 percent to $38.09. The owner of its namesake and Bloomingdale’s department stores reported second- quarter profit that beat estimates, helped by its credit cards.
Computer Sciences Corp. (CSC) gained 17 percent to $29.86. The technology contractor for government and corporate customers reported profit and revenue that topped estimates as its new chief executive officer works on turning the company around.
Express Scripts Holding Co. added 7.4 percent to $60.17. The largest U.S. processor of drug prescriptions raised its annual profit forecast as gross margins improved following its April acquisition of Medco Health Solutions Inc.
NRG Energy Inc. (NRG) rose 2.5 percent to $20.02. The company, which agreed to buy GenOn Energy Inc. to become the largest U.S. independent power plant owner, reported second-quarter profit that beat estimates as costs fell and it added customers.
A123 Systems Inc. (AONE) advanced 2.4 percent to 48 cents. The maker of lithium batteries signed a $450 million non-binding financing agreement with Wanxiang Group Corp., China’s largest auto-components company.
McDonald’s slumped 1.7 percent to $87.54. Analysts projected an increase of 2.3 percent, the average of estimates compiled by Consensus Metrix. Sales at domestic locations fell 0.1 percent. Analysts estimated a gain of 2.2 percent.
Priceline tumbled 16 percent to $570.95. Consumers in Europe (PCLN) -- one of the main engines of growth for Priceline -- put off travel amid an economic crisis there. The company had been boosting sales in the region after the 2005 acquisition of Amsterdam-based Booking.com. Results were also dragged down as the strength of the U.S. dollar eroded the value of overseas receipts, said Chief Executive Officer Jeffery Boyd.
Alpha Natural Resources Inc. (ANR) declined 5.7 percent to $6.51. The second-largest U.S. coal producer lowered its metallurgical coal sales forecast for 2012 as steel output declined in Europe and slowed in China.
Dish Network Corp. (DISH) slipped 0.8 percent to $30.43. The second-largest U.S. satellite-television provider reported second-quarter profit that missed analysts’ estimates as the company’s average revenue per user trailed projections.
The S&P 500 is in a “make-or-break situation” that will probably lead to either large gains or losses for the benchmark U.S. stocks gauge, according to technical analysts at UBS AG.
After climbing through the 1,390 level, the S&P 500 may go on to test the highs reached in March and May, Michael Riesner and Marc Mueller in Zurich wrote in a report dated yesterday. A drop below 1,325 would indicate a retreat to the early-June low of 1,266. That would be a 9.7 percent slide from yesterday’s close of 1,401.35.
Investors should watch the flow of money into so-called defensive stocks, whose earnings are less dependent on economic growth, and cyclicals, which are more tied to the performance of the economy, for signs of future moves in the S&P 500 (SPX), the analysts said.
“The U.S. market remains in a classic make-or-break situation, where a breakout and a subsequent trend move shouldn’t be too far away,” they wrote. “Either the market is able to start a new momentum impulse -- and for this we would need to see a rotation on the sector basis, from defensives into financials or cyclicals -- or the S&P 500 will very soon get a breadth problem, when defensives are starting to pull back.”
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