U.S. Stocks Rise on Earnings Amid Cyprus Bailout DebateLu Wang and Sarah Pringle
U.S. stocks rose, paring the second weekly drop of the year for the Standard & Poor’s 500 Index, as Nike Inc. and Tiffany & Co. beat earnings estimates and optimism grew that Cyprus will pass a plan to qualify for a bailout.
Nike rallied 11 percent to a record after the world’s largest sporting-goods company reported a rebound in profitability. Tiffany rose 1.9 percent after posting better-than-estimated profit amid increased demand in the Asia-Pacific region. Mondelez International Inc. and PepsiCo Inc. gained at least 3.3 percent on a report that billionaire investor Nelson Peltz has built stakes in the food makers. Apple Inc. added 2 percent to rise above its 50-day moving average.
The S&P 500 advanced 0.7 percent to 1,556.89 at 4 p.m. in New York, trimming its weekly loss to 0.2 percent. The Dow Jones Industrial Average increased 90.54 points, or 0.6 percent, to 14,512.03 today. About 5.4 billion shares traded hands on U.S. exchanges today, 14 percent below the three-month average.
“At the company level, we’re still seeing good economic momentum, and that investors continue to have a constructive view on the growth in the U.S., which should help the stock market,’” James McDonald, chief investment strategist at Northern Trust Corp. in Chicago, said by phone. His firm manages $759 billion. This week, “the market is taking a pause after a very big run. The increased concern over Europe has led investors to take a few chips off the table.”
The S&P 500 posted its second weekly decline this year after uncertainty in Cyprus and a contraction in euro-area manufacturing reignited concern about the region’s debt crisis. The U.S. equity benchmark has still climbed 9.2 percent this year and is within 10 points of its record set in 2007.
Lawmakers in Cyprus began debating legislation to help unlock bailout funds needed to avoid a financial collapse. Government spokesman Christos Stylianides said talks with the European Central Bank, the European Commission and the International Monetary Fund were in the final stages.
The ECB has said it will cut emergency funds for Cypriot banks after March 25 unless it comes to an agreement with the so-called troika of the European Commission, the European Central Bank and the International Monetary Fund. Euro-area finance ministers expect a proposal from Cyprus “as rapidly as possible” to raise the 5.8 billion euros ($7.5 billion) needed to trigger the emergency loans, they said in a statement late yesterday after a teleconference.
The S&P 500 had gained every week this year, except for the holiday-shortened four-day session ended Feb. 22, amid better-than-estimated corporate earnings and economic data. The bull market in equities entered its fifth year this month as the benchmark index more than doubled from its bottom in 2009, driven by an unprecedented three rounds of bond purchases by the Federal Reserve. The central bank said this week that it will keep up its bond buying to stimulate the economy.
All 10 industries in the S&P 500 advanced today, as consumer, energy and telephone shares climbed the most, rising at least 0.7 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, fell 3 percent to 13.57 today. The gauge, known as the VIX, is down 25 percent this year and reached its lowest level since February 2007 last week.
Nike surged 11 percent to $59.53 for its biggest gain since 2008. The company said its gross margin widened for the first time in nine quarters as orders for the Nike brand in China climbed 3 percent, beating estimates for a decline of 4.3 percent, which would have been the third straight drop.
Tiffany advanced 1.9 percent to $69.23. The world’s second-largest luxury jewelry retailer said sales in the Asia-Pacific region advanced 13 percent to $254 million in the quarter, helped by store openings in Singapore, China and Australia.
Mondelez, the snacks company separated from Kraft Foods Inc. last year, jumped 4.1 percent to a record $29.73, while PepsiCo added 3.3 percent to $78.64. The size of the stakes taken by Peltz’s Trian Fund Management LP is unclear, the Daily Telegraph said, citing one person as saying that Peltz has spent at least $2 billion on his latest foray into the food industry. Peltz could push for a merger of the two companies, the newspaper said, citing unidentified people in London.
Jeff Dahncke, a PepsiCo spokesman, said the company doesn’t need large-scale acquisitions. Jo Bradley, a U.K.-based spokeswoman for Mondelez, said the company doesn’t comment on “rumors or speculation.” A representative at New York-based Trian didn’t immediately return a voicemail requesting comment.
Apple rose 2 percent to $461.91, closing above its 50-day moving average for the first time since Oct. 4, as speculation over a dividend increase helped end the stock’s longest streak ever of staying below the threshold. Traders and analysts who study charts to forecast a security’s direction use the 50-day average to gauge the trend.
Micron Technology Inc. climbed 11 percent to $10.04 for its biggest gain since 2011. The largest U.S. maker of memory chips said second-quarter sales increased 3.4 percent to $2.08 billion amid a rebound in chip shipments. That beat the average analyst estimate of $1.91 billion.
BlackBerry, formerly Research In Motion Ltd., tumbled 7.7 percent to $14.91. Deutsche Bank AG analysts raised concerns that the new Z10 phones are getting a lukewarm response. Before today’s drop, the stock had climbed 36 percent this year, lifted by optimism that the Canadian smartphone maker’s new lineup will fuel a turnaround.
Tibco Software Inc. slumped 9.4 percent to $20.99. The maker of programs for running corporate-data centers forecast sales and profit for the current quarter that missed analysts’ estimates, citing execution challenges.
Monster Beverage Corp., the largest U.S. energy-drink maker by sales volume, dropped 3.7 percent to $48.50. Energy drinks, which have been linked to deaths and hospitalizations, may boost blood pressure and lead to an erratic heartbeat, according to a study led by Sachin Shah presented at an American Heart Association meeting.