U.S. Stocks Edge Higher, S&P 500 at Four-Month High as Oil Rises

  • Rebound in crude sparks advance as energy shares surge
  • Gains in Yahoo, Intel help lift technology companies

Three Must-See Charts About the Earnings Season So Far

U.S. stocks edged higher as an oil rally lifted energy producers, with the Standard & Poor’s 500 Index holding at a four-month high amid a slate of corporate earnings that gave investors little clear direction.

An afternoon rally stumbled in the final hour of trading to leave equities little changed, wiping out much of the gains sparked by a rebound in crude. Oil jumped after Iraq’s oil minister said major OPEC and other oil producers will meet possibly next month in a new push to freeze output. Meanwhile, a better-than-forecast profit from Discover Financial Services helped offset underwhelming results at Coca-Cola Co.

The S&P 500 gained 0.1 percent to 2,102.40 at 4 p.m. in New York, after rising as much as 0.5 percent and briefly touching the highest level since July. The Dow Jones Industrial Average added 42.67 points, or 0.2 percent, to 18,096.27, trimming a 114-point climb. The gauge held at a nine-month high. The Nasdaq Composite Index increased 0.2 percent. About 7.5 billion shares traded hands on U.S. exchanges, 7.4 percent below the three-month average.

“There’s been no bearish catalyst that’s surfaced to really knock things down and earnings are spilling in and going as expected,” said Nick Kalivas, senior equity product strategist at Invesco PowerShares in Downers Grove, Illinois, which has about $100 billion in its funds. “We’re now a couple of heartbeats off the all-time high and that’s creating performance anxiety among fund managers, causing people to think the picture’s not as glum. It’s keeping an underlying bid in the market.”

Discover shares had the biggest jump since 2011 amid gains in credit-card spending. UnitedHealth Group Inc. rose more than 2.1 percent for a second day after its plans to exit Obamacare in 16 states to curb losses. Coke fell the most since August with earnings mostly in line with expectations, disappointing investors expecting a stronger turnaround for the beverage maker. Boeing Co. sank 1.6 percent after Bank of America Corp. downgraded the stock.

The S&P 500 has rallied 15 percent since reaching a 22-month low in February and is up 2.9 percent for the year, bolstered by a recovery in oil prices, signs of stabilization in China’s slowdown and optimism central bankers will continue efforts to support growth. The gauge is also 1.3 percent away from a record reached last May.

Still, the gains in equities have come as earnings are forecast to slide at the steepest pace since the financial crisis. Analysts project first-quarter profits shrank 9.5 percent at S&P 500 firms, compared with estimates for flat earnings growth at the start of the year. Microsoft Corp., General Motors Co. and Google parent Alphabet Inc. are among 36 companies in the index scheduled to report on Thursday.

Data Watch

As policy makers and investors scrutinize data to judge the strength of the U.S. economy and the outlook for interest rates, a report this morning showed purchases of previously owned homes rose more than projected in March, indicating resilience in demand heading into the spring selling season. Traders are pricing in no chance the Federal Reserve will raise rates at its meeting next week, with December now the first month with at least even odds for a boost.

In Wednesday’s trading, the Chicago Board Options Exchange Volatility Index rose 0.3 percent to 13.28, snapping its longest streak of declines in almost two months. The measure of market turbulence known as the VIX is holding near the lowest level since August. A Goldman Sachs gauge of the most shorted stocks had the biggest climb in a week amid its longest stretch of gains since March 7.

Energy producers in the S&P 500 pushed a three-day advance to 4.3 percent as crude rallied for a second day. The group shook off a morning drop as Chevron Corp. increased 1.2 percent, while Schlumberger Ltd. and Devon Energy Corp. gained more than 1.8 percent. West Texas Intermediate crude futures rose 3.8 percent, wiping out a 3 percent retreat to close above $42 a barrel.

Banks Rally

Discover Financial surged 8.2 percent to a four-month high to lead the benchmark’s financial group. Competitor American Express Co. added 2.3 percent to a three-month high before its earnings report. Banks in the S&P 500 rose for a third day, trimming 2016 losses to less than 6.5 percent from as much as 23 percent. Bank of America climbed 3.3 percent, rising for the eighth time in nine days and adding 16 percent during that span. The stock is still down about 11 percent this year.

U.S. Bancorp. gained 2 percent, even as the nation’s largest regional lender said profit dropped 3.1 percent in the first quarter as provisions for bad loans surged 25 percent, driven by a jump in downgrades on energy-related credits.

Yahoo! Inc. increased 4.2 percent to the highest since July, buoying the technology group, after Chief Executive Officer Marissa Mayer said the company is moving swiftly to consider offers to buy its Web operations. First-quarter revenue also exceeded analysts’ estimates. Intel Corp. climbed 1.3 percent as the semiconductor company plans to cut 12,000 jobs and shift focus to higher-growth areas, such as chips for data center machines and Internet-connected devices.

Also within chipmakers, Linear Technology Corp. rallied 4 percent after its quarterly sales outpaced estimates, while its outlook for the current quarter also beat some forecasts. Broadcom Ltd. and Texas Instruments Inc. advanced at least 1.1 percent.

Coke Drags

Coca-Cola was the strongest drag today on the S&P 500, with consumer staples joining utilities as the biggest losers among the S&P 500’s 10 main industries. Coke slid 4.8 percent to cut its year-to-date gain by more than half. The shares had reached an all-time high two weeks ago. Hershey Co. lost 3.1 percent after Bank of America downgraded the shares to the equivalent of sell, citing in part sluggish U.S. chocolate sales. Procter & Gamble Co. slid 2.1 percent, the steepest drop since Feb. 11.

Utilities tumbled 2.4 percent to a one-month low, relinquishing the mantle as the S&P 500’s top-performing group this year to phone companies. NextEra Energy Inc. and Dominion Resources Inc. dropped more than 2.1 percent.

Among other companies moving on corporate news, Lexmark International Inc. added 9.4 percent after the printer maker accepted a $3.6 billion takeover offer from a group headed by China’s Apex Technology.

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