- The Washington Times - Wednesday, April 19, 2006

Profits lift tech, defense shares; oil, small-caps continue rise

BLOOMBERG NEWS

Stocks gained broadly, but more modestly, for a second day as enthusiasm about earnings outweighed an inflation report that suggested the Federal Reserve may keep raising interest rates.

Texas Instruments and Yahoo rallied after reporting quarterly sales that exceeded analysts’ estimates. United Technologies, the best performer in the Dow Jones Industrial Average, and General Dynamics of Falls Church rose after raising their profit forecasts.

The Russell 2000 Index, a benchmark for smaller companies, added 1.1 percent to 778.42. It has rallied 3.9 percent over the last two days, the biggest such rally since November 2002.

The Nasdaq Composite Index, which gets 42 percent of its value from computer-related shares, rose 14.74, or 0.6 percent, to 2370.88, a level not seen since February 2001.

The Standard & Poor’s 500 Index added 2.28, or 0.2 percent, to 1309.93, following a 1.7 percent climb Tuesday. The Dow average gained 10, or 0.1 percent, to 11,278.77.

Stocks recovered from initial losses after the government said consumer prices, excluding food and energy, rose the most in a year. Record oil prices didn’t deter the rebound.

“Earnings have been very strong for companies across the board, so it’s a nice environment for the market as long as the Fed is done with their tightening,” said Gus Sauter, chief investment officer at Vanguard Group.

Twenty-four S&P; 500 members reported quarterly results after markets closed Tuesday and before they reopened yesterday, and 14 of the shares advanced. Motorola was among the declining shares, falling the most since January after its profit margins narrowed.

The advance was broad, on relatively heavy volume. Thirteen stocks rose for every six that declined on the New York Stock Exchange. About 1.75 billion shares changed hands on the Big Board, 6.2 percent more than the three-month daily average.

Texas Instruments climbed 45 cents to $34.45. The company said first-quarter revenue increased to $3.33 billion as sales surged in China and India. This quarter, profit will be 38 cents to 43 cents a share, ahead of estimates.

Yahoo gained $2.24, or 7.2 percent, to $33.54 for the third-largest advance in the S&P; 500 and its biggest rally since April 2004.

Yahoo’s first-quarter profit rose 16 percent to $159.9 million. Net sales, which reflect the cost to sell ads on other sites, were $1.09 billion, beating the $1.08 billion estimate of Jefferies & Co.’s Youssef Squali and easing concern Google’s growth may be crimping Yahoo’s revenue. Google rallied $5.40 to $409.64.

United Technologies jumped $3.90, or 6.6 percent, to $62.80 for the top performance in the Dow average. Its first-quarter profit rose 18 percent to $768 million, or 76 cents a share. Analysts expected 73 cents a share. The company also raised its 2006 profit forecast.

General Dynamics surged $2.96, or 4.5 percent, to $69.41. The largest maker of armored vehicles for the U.S. military raised guidance for 2006 profit from continuing operations 2 cents to $3.92 a share.

Crude for May delivery rose to a record $72.40 a barrel in New York after the U.S. Energy Department said oil and gasoline inventories declined. It closed up 1.2 percent to $72.17.

Energy shares in the S&P; 500 advanced 1.5 percent for the top gain among 10 groups in the index. Valero Energy Corp., the largest U.S. oil refiner, climbed $1.54 to $68.99.

Core consumer prices accelerated more than expected last month, led by higher gasoline costs, the Labor Department said.

The yield on the 10-year U.S. Treasury note rose more than 4 basis points to 5.03 percent.

Motorola slid $1.59, or 6.6 percent, to $22.49 for the third-biggest decline in the S&P; 500. The world’s No. 2 mobile-telephone maker reported that profit margins shrank to 8.9 percent, the narrowest in two years, from 10.5 percent as the company sold more cheap phones in China.

Amgen lost $2.67 to $68.30. The world’s No. 1 biotechnology company said first-quarter sales were $3.22 billion, less than estimates. Enbrel, Amgen’s treatment for arthritis and psoriasis, faced more competition.

Coca-Cola Co. added 39 cents to $41.69. First-quarter profit rose 10 percent to $1.11 billion, bolstered by gains in Asia and Latin America. Results slightly beat estimates.

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