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Stocks Rise on Profits as Yen Climbs; Russian Shares Drop

By Callie Bost and Joseph Ciolli
April 24, 2014 4:12 PM EDT 6 Comments
Customers try Apple Inc. products during the opening of the first Apple store in Latin America, located at the Village mall in Rio de Janeiro, Brazil, on Saturday, Feb. 15, 2014.
Photographer: Dado Galdieri/Bloomberg
Customers try Apple Inc. products during the opening of the first Apple store in Latin America, located at the Village mall in Rio de Janeiro, Brazil, on Saturday, Feb. 15, 2014.

U.S. stocks rose, pushing the Standard & Poor’s 500 Index near a record, after better-than-estimated earnings from Apple Inc. (AAPL) and Caterpillar (CAT) Inc. The yen climbed, while Russian equities slid a fourth day as the conflict in Ukraine escalated.

The S&P 500 added 0.2 percent to 1,878.61 as of 4 p.m. in New York. The Nasdaq Composite Index advanced 0.5 percent. The yen strengthened against all but one of its most-traded counterparts. Copper, silver and wheat advanced. Spain’s borrowing costs declined to a record at an auction. The yield on 10-year Treasuries slipped one basis point to 2.69 percent. Russia’s Micex Index slid 2.2 percent.

More than 60 companies in the S&P 500 release quarterly results today, making it the busiest day of the season. Apple led gains in technology stocks after iPhone sales beat projections. President Vladimir Putin warned Ukraine against continuing its anti-separatist offensive after government troops killed five rebels and prompted Russia’s military to begin new drills on the two nations’ border.

“All these companies reported very solid earnings and this was the quarter where the naysayers thought profit and earnings growth was going to lag,” Dan Veru, chief investment officer who helps oversee $5 billion at Palisade Capital Management LLC, said in a phone interview. “This is what’s driving markets higher.”

Earnings Season

U.S. stocks have repeatedly failed to climb from the S&P 500’s current level. The gauge earlier this week rose to within six points of the all-time high of 1,890.9 reached April 2. It fell 0.2 percent yesterday, snapping a six-day rally that was the longest since September, and trades at 17 times reported earnings, near its highest valuation in four years.

Of the 204 companies in the S&P 500 (SPX) that have released earnings this season, 75 percent have exceeded analysts’ profit estimates, while 53 percent have beaten sales projections, according to data compiled by Bloomberg.

Apple jumped 8.2 percent. The company reported surging sales of iPhones after the handset became available through China Mobile Ltd. It also said it will increase its share repurchase authorization by $30 billion, boost its dividend and split its stock seven for one.

Caterpillar rose 1.8 percent. The largest maker of mining and construction equipment posted first-quarter earnings and sales that beat analysts’ estimates as it boosted its full-year outlook on improved expectations for the building industry.

Price Competition

Verizon Communications Inc. dropped the most in the Dow Jones Industrial Average, with AT&T Inc. sinking a second day, amid concerns that price competition is shifting revenue. Qualcomm Inc. sank 3.5 percent as results fell short of forecasts.

“There’s no question earnings numbers were good, but there was some anticipation of it to a certain degree,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “I still tend to think, at the end of the day, that we’re going to see earnings be the more important thing that drives the market.”

U.S. durable-goods orders increased 2.6 percent, the biggest gain since November, the Commerce Department said. Jobless claims increased by 24,000 to 329,000 in the week ended April 19, the most in a month, Labor Department figures showed.

The Chicago Board Options Exchange Volatility Index (VIX), a measure of stock volatility known as the VIX, rose 0.9 percent to 13.36. The gauge is down 2.8 percent this year.

Russian Stocks

Russian stocks slid and government bonds dropped. An agreement to disarm rebels signed last week in Geneva by Ukraine, Russia, the European Union and the U.S. is on the brink of collapse. President Barack Obama said today the U.S. and its allies have additional sanctions against Russia ready to go because Putin’s government has yet to abide by the accord.

Ukrainian Interior Ministry and army troops destroyed three road blocks as they went into separatist-held Slovyansk in the Donetsk region. Putin called the Ukraine offensive a “very serious crime against its own nation.”

The yen gained a second day against the dollar as tensions between Russia and Ukraine stoked investor demand for safety. The Japanese currency rose 0.2 percent to 102.31 per dollar.

Spain’s Treasury sold three-year to 10-year debt at record low yields after the Bank of Spain said growth sped up in the first quarter, underpinning a recovery in the euro region’s fourth-largest economy. The nation’s benchmark three-, five- and 10-year bonds were sold today to yield the least since the start of series in 2004 and 2005, data released by the Madrid-based central bank showed.

The S&P GSCI (SPGSCI) gauge of 24 commodities climbed 0.6 percent, the first increase this week. Copper rose 1.5 percent on the Comex and West Texas Intermediate oil advanced 0.5 percent to $101.93 a barrel.

Wheat rose for a third day, adding 2 percent, amid concern moisture deficits will persist in the U.S., the biggest exporter, and Europe as rain forecast in coming days misses some areas and leave others still too dry.

To contact the reporters on this story: Callie Bost in New York at cbost2@bloomberg.net; Joseph Ciolli in New York at jciolli@bloomberg.net

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

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