U.S. stocks were little changed as Advanced Micro Devices Inc. (AMD)led technology shares higher after posting better-than-estimated earnings, offsetting a drop in industrial shares spurred by lower-than-projected results at Caterpillar Inc. (CAT)
AMD rose 18 percent after the chipmaker forecast more sales than analysts estimated. Technology stocks in the S&P 500 gained 1.3 percent, the most among 10 industries, as SanDisk Corp. (SNDK)added 11 percent after earnings beat projections. Caterpillar slid 5.6 percent as profit trailed projections because of Japan’s record earthquake and slower demand from China. C.R. Bard Inc. declined 11 percent, the most in the S&P 500, after reporting a loss in the second quarter.
The S&P 500 rose 0.1 percent to 1,345.40 at 2:57 p.m. in New York and is up 2.2 percent for the week. The Dow Jones Industrial Averagedropped 40.79 points, or 0.3 percent, to 12,683.62. Gains in technology stocks pushed the Nasdaq-100 Index up 1.1 percent to a 10-year high.
“You’re seeing fast money gravitate to the large-cap tech names, viewing them as better able to withstand slower economic growth,” said Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York in a telephone interview. “There are a couple stocks weighing on the Dow where the earnings came out a little less than expected but overall, earnings have been pretty good. All eyes are on the budget deficit discussion. It’s not a market people really want to short.”
Aid for Greece
Stocks surged yesterday after euro-area leaders eased the terms of loans for cash-strapped nations and announced the latest aid for Greece after eight hours of talks yesterday. Officials empowered their 440-billion euro ($635 billion) rescue fund to buy debt across stressed nations, helping to erect a firewall around Spain and Italy even as they risked temporary default to lighten the Greek debt burden.
“Policy makers have made an important step,” said Jeffrey Palma, global equity strategist at UBS AG, in an interview on Bloomberg Television’s “In the Loop.” “Is this the be-all end-all package? No, and I think we need to be concerned still that there are medium-term challenges, but I do think it eliminates some of those tail risks.”
Quarterly reports from corporations have helped boost U.S. stocks this week. Among 121 S&P 500 companies that have reported earnings since July 11, 83 percent exceeded the average analyst estimate, according to data compiled by Bloomberg. The S&P 500 climbed 2.1 percent this week through yesterday.
Chipmakers Rise
Technology companies rallied, with semiconductor makers rising 1.8 percent for the biggest S&P 500 gain among 24 industries. AMD jumped 18 percent to $7.69, the largest gain in the index. The second-largest producer of processors for personal computers forecast third-quarter sales that exceeded analysts’ estimates, citing new chip orders.
SanDisk gained 11 percent to $46.34 as the maker of flash- memory cards also reported per-share earnings for the second quarter that topped estimates. Caterpillar, which accounted for the second-biggest proportion of the Dow at the start of trading, fell 5.6 percent to $105.39. The world’s largest maker of construction and mining equipment posted profit, excluding $204 million in costs related to the acquisition of Bucyrus International Inc., of $1.72 a share, trailing the $1.75 average of 20 analyst estimates compiled by Bloomberg.
‘A Bellwether’
“Caterpillar’s clearly a bellwether,” said Robert Carey, chief investment officer at First Trust Portfolios LP, in a telephone interview. The Wheaton, Illinois-based firm oversees about $50 billion. “Given the overwhelming number of companies that have beat estimates, anybody that comes up short is not going to be treated well.”
C.R. Bard declined 11 percent to $100.16. The maker of surgical specialty products reported a loss in the second quarter due to a legal settlement.
McDonald’s Corp. (MCD) jumped 3 percent, the biggest gain in the Dow, to $89.14. The world’s largest restaurant chain said second-quarter profit rose 15 percent, topping analysts’ estimates, as more consumers dined out and McCafe beverages boosted sales.
Skyworks Solutions Inc. (SWKS) jumped 17 percent, the second- biggest gain in the Russell 1000 Index, to $26.56. The wireless semiconductor company forecast fourth-quarter revenue of $400 million, beating the average analyst estimate of $371.3 million.
Industrial shares declined 0.9 percent collectively, the worst performance out of 10 groups in the S&P 500. Telecommunication companies had the second-biggest decline, erasing 0.9 percent as Verizon Communications Inc. led shares lower.
Verizon Wireless, the wireless carrier that’s co-owned by Verizon and Vodafone Group Plc, said today it activated 2.3 million Apple Inc. iPhones in the second quarter, trailing AT&T Inc.’s 3.6 million devices in the period. Verizon shares fell 2.9 percent to $36.50.
Source: www.bloomberg.com
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