S&P 500 extends record as Facebook rallies

NEW YORK – U.S. stocks rose, with the Standard & Poor’s 500 Index extending a record, as Facebook Inc. rallied on higher sales and growth in global manufacturing offset a drop in home sales.

Facebook jumped 5.1 percent after saying second-quarter sales surged 61 percent. Under Armor Inc. surged 16 percent after increasing its 2014 profit target. Caterpillar sank 3.3 percent after forecasting full-year profit that fell short of estimates. AT&T Inc. dropped 0.6 percent as earnings missed forecasts. Qualcomm Inc. declined 6.3 percent after forecasting quarterly profit that may trail projections.

The S&P 500 added 0.2 percent to a record 1,990.74 at 12:09 p.m. in New York. The Dow Jones Industrial Average climbed 14.93 points, or 0.1 percent, to 17,101.56. Trading in S&P 500 stocks was 25 percent above the 30-day average at this time of day.

“Earnings are coming in better than expected and the market has taken a queue from that but the economy overall is kind of a mixed bag,” John Kvantas, director of equity research at USAA Investments, said in a phone interview. He helps oversee $63 billion in mutual fund assets.

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The S&P 500 rose 0.2 percent on Wednesday as Apple Inc. helped push technology companies higher, while health-care stocks rallied on earnings. The gauge has advanced 7.5 percent this year through Wednesday amid better-than-estimated corporate results and central-bank support. The index trades at 18.2 times the reported earnings of its members, the highest since 2010.

Data watch

Global equities advanced Thursday after reports showed euro-area manufacturing and services grew this month while Chinese factory activity rose to an 18-month high in July.

A Markit Economics Ltd. factory gauge for the U.S. unexpectedly declined to 56.3 in July from 57.3 the previous month. Readings above 50 indicate expansion.

Separate data showed fewer new U.S. homes were sold in June than forecast and May data showed the biggest downward revision on record, painting a picture of a housing market that is struggling to gain traction.

Another release showed the number of Americans filing applications for unemployment benefits unexpectedly dropped last week to the lowest level in more than eight years.

The International Monetary Fund lowered its outlook for global growth this year as expansions weaken from the U.S. to China and military conflicts raise the risk of a surge in oil prices.

Ukraine tensions

Investors are also weighing the threat of new European Union sanctions targeting Russia over the Krelmin’s actions in Ukraine. Among the options being considered is a ban on European purchases of bonds or shares sold by Russia’s state-owned banks, according to a proposal presented to member states.

The U.S. is pushing Europe to toughen its stance toward President Vladimir Putin a week after the Malaysian jet was hit by a missile American officials say was probably fired from a Russian-supplied launcher. Russia denies involvement.

Ukrainian Prime Minister Arseniy Yatsenyuk resigned after two parties quit the ruling coalition and President Petro Poroshenko signaled his support for early elections.

Fifty companies in the S&P 500 including Visa Inc., Amazon.com Inc. and Starbucks Corp. report earnings Thursday. About 77 percent of those that have posted results this season have beaten analysts’ estimates for profit, while 64 percent exceeded sales projections, according to data compiled by Bloomberg.

Overbought market

Profits at S&P 500 members probably rose 6.2 percent in the second quarter, while sales gained 3.3 percent, according to analyst estimates compiled by Bloomberg.

“I’m quite impressed with the results I’ve seen till now,” said Pierre Mouton, who helps oversee $8 billion at Notz, Stucki & Cie. in Geneva. “In most cases, we’ve had companies beating on revenues and earnings, and posting positive outlooks. I don’t think the market can go much higher in the short term because it’s overbought, but I don’t expect any meaningful correction.”

Seven of the 10 main S&P 500 groups advanced Thursday, with consumer, financial and energy shares advancing at least 0.3 perecent.

Facebook climbed 5.1 percent to an all-time high. The operator of world’s biggest social network said mobile advertisements helped profit more than double as sales surged.

Tractor Supply Co. jumped 6.9 percent after releasing its financial results to help producers of consumer-discretionary products rally.

Apparel, planes

Under Armour surged 16 percent for the largest increase in the group. The maker of compression T-shirts and other athletic apparel raised its annual growth forecast. Nike Inc. jumped 1.7 percent for the biggest gain in the Dow.

United Continental Holdings Inc. climbed 2.9 percent. The carrier reported second-quarter profit that beat analysts’ estimates and authorized a $1 billion stock repurchase.

Industrial stocks slid 0.3 percent to pace declines in the S&P 500. Precision Castparts sank 7.1 percent for the biggest loss after reporting profit and sales that missed estimates.

Caterpillar tumbled 3.3 percent, the most since May and the biggest decline in the Dow. The largest maker of mining machinery forecast full-year sales and earnings that fell short of analysts’ estimates as it said there’s no sign of an upturn in the industry in 2014.

Housing shares plunged, with an S&P index of home builders sinking 3.8 percent for its biggest drop since November. Meritage Homes Corp. sank 3.1 percent and Toll Brothers Inc. slid 4 percent as all 11 members of the index retreated

Horton, Qualcomm

D.R. Horton dropped 9.3 percent for the biggest loss. The largest U.S. homebuilder by revenue said its fiscal-third quarter earnings declined as the company’s sales margin shrank.

AT&T fell 0.6 percent. The second-largest U.S. wireless carrier fell short of earnings estimates as more customers started paying for devices with installment plans, an option that’s reducing profits as it cuts monthly service bills.

Qualcomm dropped 6.3 percent. The chipmaker projected that net income in the current quarter that will fall short of the average analyst estimate. The company cited challenges to its technology-licensing business in China.

TripAdvisor Inc. slumped 9 percent. The online travel service posted second-quarter adjusted earnings of 55 cents a share, missing the 61-cent projection of analysts in a Bloomberg survey.

The Nasdaq Biotechnology Index slipped 0.9 percent after four days of gains. Celgene Corp. lost 3.5 percent as its 2014 profit forecast fell short of the average analyst estimate.

Puma Biotechnology Inc. slid 9.8 percent after surging 295 percent on Wednesday following a successful medical trial. Adage Capital Management LP, the Boston hedge fund started by two former money managers at Harvard University’s endowment, made almost $1 billion Wednesday on its 19 percent stake in the company.

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