New York Stock Exchange
U.S. stocks advanced, following Monday’s drop in the Standard & Poor’s 500 Index, as sales of new homes fell to a pace that exceeded forecasts and amid better-than-estimated earnings from AT&T Inc. to 3M Co. (MMM)
AT&T, the largest U.S. phone company, and 3M Co., the maker of Post-it Notes, gained at least 2.3 percent. International Business Machines Corp., the world’s biggest computer-services provider, rallied 1.7 percent after boosting its stock-buyback plan by $7 billion and raising its dividend. Apple Inc. (AAPL) retreated 1.2 percent ahead of its quarterly results.
According to Bloomberg report, the S&P 500 advanced 0.5 percent to 1,373.68 at 10:35 a.m. New York time. The Dow Jones Industrial Average increased 101.79 points, or 0.8 percent, to 13,028.96 today.
“Earnings have been much better than what many people expected,” Ethan Anderson, senior portfolio manager for Rehmann Financial in Grand Rapids, Michigan, said in a telephone interview. His firm manages about $2 billion. “These companies are finding ways to become more efficient and create profit. The economy is improving. Growth is very real.”
Stocks rose today as government data showed that new home purchases dropped to a 328,000 annual rate, a decline of 7.1 percent from a revised 353,000 pace in February that was stronger than initially projected. Federal Open Market Committee members begin a two-day meeting Tuesday.
Yesterday’s losses were driven by political uncertainty as Dutch Prime Minister Mark Rutte offered to quit after lawmakers split over austerity and French President Nicolas Sarkozy lost the first round of his re-election bid. The S&P 500 is still up 9.2 percent in 2012 amid better-than-estimated economic and corporate data. Earnings per share have topped forecasts at 82 percent of S&P 500 companies that reported results since April 10, according to data compiled by Bloomberg.
3M increased 2.3 percent to $89.14 after beating analysts’ first-quarter profit estimates as U.S. auto and industrial demand helped make up for slowing markets abroad.
AT&T (T) added 3.5 percent to $31.69. The largest U.S. phone company posted first-quarter earnings that beat analysts’ estimates after wireless subscribers spent more on browsing the Web, downloading video and sending e-mail.
The company is promoting feature-rich devices such as Apple’s iPhone to boost monthly bills and offset slower subscriber growth in a market where most people already have mobile phones. Some investors say that the carrier’s earnings may give some indication of what Apple may say when it reports quarterly results after the close of the market.
Peter Misek, analyst at Jefferies & Co., says both AT&T and Verizon Communications Inc.’s results imply estimates for Apple are too high. On average, the analysts surveyed by Bloomberg forecast the company will report fiscal second-quarter profit of $10.03 a share. The shares declined 1.2 percent to $565 today and are up 39 percent so far in 2012.
Apple dipped below its 50-day average yesterday for the first time since December. A weekly close below that level may signal a decline of as much as 19 percent from its record high is under way, according to UBS AG.
Should Apple fail to hold above its 50-day average, it may trigger a retreat to as low as $515, according to Peter Lee, the New York-based chief technical analyst for UBS.
“Violation of this level on a weekly closing basis opens the door for a deeper correction,” Lee wrote in an e-mail yesterday. “To convince traders to return, AAPL needs to rally” above $600 at least, he said, referring to the stock’s ticker.
IBM (IBM) gained 1.7 percent to $202.04. The quarterly payout will rise 10 cents to 85 cents a share, Armonk, New York-based IBM said today in a statement before a shareholder meeting in North Charleston, South Carolina. IBM had $5.7 billion remaining from a previous buyback plan, bringing the total available for repurchases to $12.7 billion.
Ford Motor Co. (F) rallied 1.5 percent to $11.52. The company and its Ford Motor Credit unit were raised to investment grade by Fitch Ratings, which cited the company’s “significantly improved financial performance.”