Tags: stocks | market | IBM | Dow

Stocks Rebound From Sell-Off as S&P 500 Climbs for Third Day

Monday, 20 October 2014 04:50 PM

U.S. stocks rallied for a third day as optimism over corporate earnings spurred a rebound from last week’s sell-off.

Apple Inc. advanced 2.1 percent before reporting quarterly results. Hasbro Inc. climbed 4.9 percent after reporting higher- than-estimated profit and Sears Holdings Corp. surged 23 percent after saying it plans to raise capital. International Business Machines Corp. slid 7.1 percent, closing at the lowest price since 2011, after abandoning an earnings forecast for 2015.

The Standard & Poor’s 500 Index rose 0.9 percent to 1,904.02 at 4 p.m. New York time. The index has fallen for the past four weeks and is down 5.3 percent since Sept. 18. The Dow Jones Industrial Average added 19.26 points, or 0.1 percent, to 16,399.67. The Nasdaq Composite Index added 1.4 percent.

“It’s all about earnings,” said Karyn Cavanaugh, the New York-based senior market strategist at Voya Investment Management LLC. Voya oversees $215 billion. “Yes, IBM earnings were a big miss, but other company earnings are coming in better than expected and that’s good news. The growth rate for the third quarter has been ratcheted up and that’s some good news for the market.”

Profit for S&P 500 companies probably rose 5.9 percent in the third quarter, a forecast that’s been revised upward from an increase of 4.8 percent as of Oct. 10, and sales increased 4 percent, according to analysts’ projections compiled by Bloomberg.

Solid Footing

“The state of corporate earnings in the U.S. is on solid footing,” Adam Parker, chief U.S. equity strategist at Morgan Stanley in New York, wrote in a report today.

Apple climbed 2.1 percent to $99.76. The world’s largest company by market value reports quarterly earnings after markets close today. Analysts estimate the iPhone maker’s profit rose 10 percent.

Hasbro rallied 4.9 percent to $56.51. Consumer discretionary stocks in the S&P 500 added 1.4 percent.

IBM lost 7.1 percent, the biggest decline since April 2013, to $169.10. The company said it will provide an update on its projections in January, ditching a five-year plan to boost profit. With technology customers moving from owning hardware to storing data in the cloud, IBM is now cutting more jobs, reducing its forecast for free cash flow and handing over an unprofitable chip unit to Globalfoundries Inc.

Airlines Rally

The Bloomberg U.S. Airlines Index jumped 5.2 percent. The Dow Jones Transportation Average added 1 percent, a fifth day of gains. The average price of regular gasoline at the pump fell to $3.10 a gallon yesterday, the lowest since January 2011 and down 57 cents since the end of June, according to AAA, the largest U.S. auto group.

SunEdison Inc. jumped 7.7 percent to $17.90 and Terraform Power Inc. surged 11 percent to $27.77. David Einhorn, president of Greenlight Capital Inc., recommended investors buy the two renewable power companies, according to two people with knowledge of the matter.

Einhorn, who runs the $10 billion Greenlight, recommended the stocks at the Robin Hood Investors Conference, according to the people who attended the event in New York today, who asked not to be identified because the presentation was private and closed to media.

Sears Holdings Corp. jumped 23 percent to $34.96. The retailer plans to raise capital by offering shareholders $625 million of notes plus warrants to buy additional stock, an attempt to give the company time to return to profitability.

Tesoro Corp. rallied 8.4 percent, the biggest gain in the Standard & Poor’s 500 Index, to $65.43 after a partnership it controls agreed to buy QEP Resources Inc.’s natural-gas pipeline and processing unit for $2.5 billion.

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U.S. stocks rallied for a third day as optimism over corporate earnings spurred a rebound from last week's sell-off. Apple Inc. advanced 2.1 percent before reporting quarterly results.
stocks, market, IBM, Dow
Monday, 20 October 2014 04:50 PM
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