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S&P 500 Rises to Cap Longest Rally in 2014 Amid Earnings

By Joseph Ciolli
April 21, 2014 4:20 PM EDT 27 Comments

U.S. stocks rose a fifth day, with the Standard & Poor’s 500 Index (SPX) capping its longest streak since October, amid signs of improving corporate earnings.

Newmont Mining Corp. advanced 6.4 percent as it discussed a possible merger with Barrick Gold Corp., people with the knowledge of the matter said. Sketchers U.S.A. Inc. rose 1.9 percent as runner Meb Keflezighi won the Boston Marathon today wearing a model of the company’s shoes. Sarepta Therapeutics Inc. rose 39 percent after saying it plans to submit its muscular dystrophy treatment for approval this year.

The S&P 500 rose 0.4 percent to 1,871.89 at 4 p.m. in New York today, putting its five-day advance at 3.1 percent. The Dow Jones Industrial Average added 40.71 points, or 0.3 percent, to 16,449.25. About 4.9 billion shares changed hands on U.S. exchanges today, the smallest total in 2014.

“The few earnings that we’ve had so far have been coming in pretty well,” John Fox, director of research at Fenimore Asset Management in Cobleskill, New York, said in a phone interview. “All the fundamentals still line up that stock prices can go higher. Interest rates are still low, the economy’s getting better. All of that is still a good environment for equities.”

The S&P 500 jumped 2.7 percent last week, the most since July to rebound from the previous week’s technology-led selloff, as corporate earnings from Morgan Stanley to Citigroup Inc. and Yahoo! Inc. surpassed estimates and Federal Reserve Chair Janet Yellen reiterated the bank’s commitment to supporting the economy.

The benchmark index is 1 percent below its record high reached April 2. U.S. equity markets were closed on April 18 for the Good Friday holiday.

Netflix Earnings

Netflix Inc. and Zions Bancorporation are among S&P 500 companies reporting earnings today. More than 70 percent of the ones that have announced results this season have beaten analysts’ profit estimates, data compiled by Bloomberg show.

Netflix added 3 percent in extended trading after posting profit and subscriber growth that topped estimates. The stock gained 0.8 percent to $348.49 in regular trading.

Analysts project that earnings at S&P 500 companies increased 0.7 percent in the first quarter, while revenue climbed 2.6 percent, according to the average estimate.

“I suspect most companies are going to raise guidance for the upcoming quarters thanks to the pumped up demand and the spring thrall,” Patrick Spencer, who helps oversee more than $100 billion as head of equity sales at Robert W. Baird & Co. in London, said in a phone interview. “The economy remains in a sweet spot. I’m very optimistic for this year.”

Data Watch

Data today showed an index of economic strength in the U.S. rose in March by the most in four months, a sign the economic expansion will strengthen following harsh winter weather. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.8 percent after rising 0.5 percent in February.

The Chicago Board Options Exchange Volatility Index (VIX), a gauge for U.S. stock volatility known as the VIX, slipped 0.8 percent to 13.25. The measure slid 22 percent last week, the most since January 2013.

Eight of the 10 main S&P 500 groups advanced today, with health-care stocks adding 1.2 percent to pace gains. Pfizer Inc. climbed 2.3 percent to $30.94 for the biggest gain in the Dow. The world’s biggest drugmaker, held informal, now-discontinued talks with AstraZeneca Plc about possibly buying the London-based maker of asthma and heart drugs, said two people familiar with the matter.

AMD, Micron

Advanced Micro Devices Inc. (AMD) surged 12 percent to $4.12, the highest since January. The maker of processors for personal computers posted first-quarter profit that topped estimates and forecast second-quarter sales that exceeded forecasts. Micron Technology Inc. added 5.9 percent to $25.32.

Halliburton Co. climbed 3.3 percent to $62.92. The world’s largest fracking service provider said it expects second-quarter profit will grow by 25 percent. The company also reported that earnings in the first quarter increased more than analysts had estimated.

Sketchers rose 1.9 percent to 35.92. Keflezighi was wearing the company’s Gomeb Speed 3 shoes as he became the first American to win the Boston Marathon in 31 years.

Barrick Gold decreased 3.9 percent to $17.28, and Newmont Mining advanced 6 percent to $25.05, the biggest gain in the S&P 500. Talks to merge the world’s largest gold mining companies broke down April 18 amid minor disagreements that leave open the possibility that a deal could be revived, two people familiar with the matter said.

Sarepta, Athenahealth

Sarepta Therapeutics surged 39 percent to 33.98. The biotechnology company will submit a New Drug Application to the Food and Drug Administration this year for its treatment of Duchenne muscular dystrophy. The plan comes after a guidance letter from FDA that proposed a strategy for the submission.

Athenahealth Inc. lost 6.9 percent to $135.59. The medical-software company posted first-quarter profit of 12 cents a share, missing the average analyst projection of 16 cents.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron

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