US stocks rallied, pushing the Standard & Poor’s 500 Index to the highest level in almost nine months, as companies from Motorola Inc to MasterCard Inc. posted better-than-estimated results and jobless claims held below June levels.
Motorola jumped the most since April, gaining 10 per cent, after job cuts helped the biggest US mobile-phone maker report a smaller loss than analysts projected. MasterCard added 6.6 per cent on earnings that topped the average forecast by 11 per cent. General Electric Co led the Dow Jones Industrial Average higher with a 7.6 per cent advance on speculation new banking rules will let the company keep its finance unit.
The S&P 500 added 2.1 per cent to 995.92, the highest intraday level since November 5, as of 11 am in New York. The Dow Jones Industrial Average advanced 170.12 points, or 1.9 per cent, to 9,240.84. Stocks in Europe and Asia increased, pushing the MSCI World Index up 2 per cent.
“We’re still in the stage that the rising tide of a recovering economy is going to lift all boats,” said Marc Harris, co-head of global research at RBC Capital Markets in New York. “This phase of the bad news getting less bad is continuing to be sustained. There’s a lot of hope and optimism that’s being built in.” All 10 industry groups in the S&P 500 advanced at least 1.2 per cent today after the Labor Department’s weekly jobless data bolstered expectations firings are slowing as the economy stabilises. Applications rose by 25,000 to 584,000 in the week ended July 25, compared with more than 600,000 claims every week last month. The total number of people collecting unemployment insurance decreased for a third week.
The S&P 500 and Dow average have risen 13 per cent since July 10 after companies including Caterpillar Inc and 3M Co reported results that topped estimates. The surge left the benchmark index for US equities trading at 16.8 times its companies’ profits over the past 12 months, the highest level since September, according to Bloomberg data. About three out of every four companies in the S&P 500 that released results since June 17 have exceeded analysts’ second- quarter profit estimates, according to data compiled by Bloomberg.
The data shows they’ve beaten forecasts by an average 9 per cent, even as earnings tumbled 31 per cent.
Motorola increased 10 per cent to $7.25 after reporting a loss, excluding some costs, of 1 cent a share. That beat the average estimate of 4 cents by analysts in a Bloomberg survey.
MasterCard jumped 6.6 per cent to $200.93. The world’s second-biggest payment-card network raised fees and processed more purchases in the second quarter, driving profit to $2.68 a share to exceed the average analyst estimate of $2.42.
Visa Inc, which runs the No 1 credit-card network, gained 2.8 per cent to $68.62 after it also topped projections with more consumers paying bills with credit, charge and debit cards.
GE increased 7.6 per cent to $13.19. Companies that already have finance arms or industrial-loan businesses should be able to retain them without being subject to Federal Reserve oversight of their manufacturing operations, US Representative Barney Frank said in an interview with Bloomberg News on Wednesday.
GE, which makes everything from jet engines to medical imaging machines, was also upgraded to “buy” from “neutral” at Goldman Sachs.
Treasuries fell, pushing the yield on seven-year notes to near the highest level in more than a month, as the US prepares a $28 billion offering of the debt amid concern the deluge of supply will overwhelm demand. Ten- and 30-year debt fell for the first time in three days before the auction, the last of four this week totaling a record $115 billion. Sales in the past two days drew higher-than-expected yields.
Better-than-estimated results from Dow Chemical Co and International Paper Co propelled a measure of raw-material companies to the steepest gain among the 10 main industry groups in the S&P 500. Dow, the largest US chemical maker, jumped 8.8 per cent to $22.06, while International Paper added 5.5 per cent to $19.40.
Forty-nine companies in the S&P 500 were scheduled to release second-quarter earnings today.
Alcoa Inc gained 3.1 per cent to $11.35 as copper, aluminum, nickel and zinc prices advanced. Barrick Gold Corp. increased 3.8 per cent to $34.10 as gold rallied and the company beat the earnings estimates.
Akamai Technologies Inc tumbled 21 per cent to $16.07. The provider of software that makes web sites load faster said profit excluding some items was 40 cents a share in the second quarter, missing the average analyst estimate by 1.5 per cent.
