U.S. stocks rise as Google, GE results top analyst estimates

NEW YORK – U.S. stocks rose, with the Standard & Poor’s 500 Index extending a record, as results from Google Inc. and General Electric Co. topped estimates and data showed China’s economic growth accelerated.

Google rallied 13 percent to surpass $1,000 a share for the first time after reporting third-quarter sales that beat analysts’ projections. General Electric added 3.9 percent as demand for industrial products boosted earnings. Chipotle Mexican Grill Inc. surged 14 percent to a record as customer traffic rose. UnitedHealth Group Inc. slumped 3.3 percent, extending yesterday’s 5.1 percent slide after the insurer reported sales that fell short of analyst estimates.

The S&P 500 added 0.6 percent to 1,742.95 at 1:28 p.m. in New York. The gauge has rallied 2.3 in the past five days, headed for its biggest weekly advance since July. The Dow Jones Industrial Average added 17.08 points, or 0.1 percent, to 15,388.73. Trading in S&P 500 stocks was 28 percent above the 30-day average at this time of day.

“People are looking at earnings but they’re also looking at what they think is going to happen next,” Sarah Hunt, an associate fund manager and analyst who helps oversee $4.5 billion at Purchase, N.Y.-based Alpine Woods Capital Investors LLC, said in a phone interview. “After this political problem no one is expecting this to happen again in January. People are just looking for a little bit of a better economic backdrop to continue what’s been a pretty decent environment for stocks.”

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The S&P 500 closed yesterday at a record of 1,733.15 as speculation grew that the Federal Reserve will maintain its rate of asset purchases after Congress ended the standoff over the federal budget and borrowing authority. The gauge gained 2.4 percent during the 16-day closure.

Earnings scorecard

Thirteen S&P 500 companies released earnings for the third quarter today. Analysts have raised their forecasts for profits during the period and now estimate an average increase of 2.5 percent for all companies in the gauge, according to estimates compiled by Bloomberg today. That compares with an expected gain of 1.4 percent as of Oct. 11.

Earnings at the 100 companies that have reported so far grew by an average of 4.4 percent, while sales gained 2 percent. Some 70 percent of the companies have topped analysts’ profit estimates, while 56 percent have beaten on sales.

Gains in the S&P 500 have averaged 1.1 percent in the first four weeks of earnings seasons since 2003, according to data compiled by Bloomberg. That’s about twice the usual four-week gain in the index.

“My concern would be on a very short term basis that some companies are going to use the drama of the past couple of weeks as a pretext to lower the bar,” Matthew Kaufler, a portfolio manager at Federated Investors Inc. in Rochester, N.Y., said by phone. His firm oversees $363.8 billion. “Even if there is some weakness to forward guidance, I think that’s going to get shrugged off and we’re going to finish the year pretty strong.”

Data delay

Investors will have to wait until Oct. 21 to get the next snapshot of economic activity, when data on sales of existing homes is released. The September U.S. jobs report, originally scheduled to be released on Oct. 4, will be issued on Oct. 22. The report was delayed by the partial federal shutdown. October employment data will come out on Nov. 8, rather than Nov. 1.

Chicago Fed President Charles Evans said yesterday the central bank should not begin reducing the pace of asset purchases as the data used to gauge the economy’s health stopped during the shutdown. Dallas Fed President Richard Fisher said fiscal discord has undermined the argument for tapering the purchases.

Stimulus boost

The Fed stimulus has helped propel the S&P 500 up by more than 150 percent from its March 2009 low. The gauge has surged 22 percent this year and jumped to its previous intraday record of 1,729.86 on Sept. 19, a day after the Fed unexpectedly delayed tapering at its last policy meeting.

Data today from China showed the world’s second-largest economy grew by 7.8 percent in the July-September period, accelerating for the first time in three quarters, as Premier Li Keqiang spurred factory output and investment. Industrial production advanced in September by 10.2 percent as predicted by economists.

“The numbers out of China are supporting markets today after recent disappointing data,” Plassard said. “While sentiment is still positive, the rally may be short-lived as the debt-ceiling issue will come back to haunt us again soon.”

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, sank 3.6 percent. The gauge has plunged 17 percent in the past five days and is headed for the biggest weekly decline since March.

Google $1,000

Eight out of 10 main industries in S&P 500 advanced, with technology and phone companies rising at least 1.1 percent to pace gains.

Google surged 13 percent to a record $1005.94. The owner of the world’s biggest search engine said revenue, excluding sales passed on to partner sites, of $11.92 billion exceeded the average analyst as the number of promotions sold via mobile, video and other services made up for shrinking advertising prices.

Google’s rally helped push the Nasdaq 100 Index 3.4 percent higher for the week, leaving the gauge on track for its highest close since October 2000.

General Electric added 3.9 percent to $25.63 for the biggest gain in the Dow. The company’s earnings beat analysts’ estimates as industrial sales climbed, led by demand for jet engines and drilling equipment, and rising orders pushed its backlog to a record.

Equity trading

Morgan Stanley advanced 2.6 percent to $29.67. Earnings beat analysts’ estimates as equity-trading revenue jumped the most among the biggest Wall Street firms and the wealth- management profit margin climbed.

Chipotle Mexican Grill surged 14 percent, the most since October 2010, to a record $501.79. The chain is spending more on marketing and traditional advertising to help maintain revenue growth that was the fastest among restaurant chains in the S&P 500 last year.

Amazon.com Inc. rallied 6.3 percent to $330.26, on track for a record close. UBS AG analyst Eric Sheridan raised his rating on the stock to buy from hold, saying he expects revenue growth to accelerate in the fourth quarter.

Schlumberger Ltd. gained 2.5 percent to $93.68 as the world’s largest oilfield-services provider said quarterly net income climbed to $1.7 billion, or $1.29 a share, from $1.4 billion, or $1.07, a year earlier.

Baker Hughes Inc. gained 7.2 percent to $55.52 as the oil services provider reported third-quarter profit that beat analyst estimates and said it expects “solid, profitable’ international growth in 2014.

Dow losses

UnitedHealth dropped 3.3 percent to $68.99, a three-month low. Shares in the largest U.S. health insurer yesterday fell the most in more than two years after reporting worse-than-forecast results. The company exceeded analyst expectations in all but one quarter over the last four years, helped by rising enrollment and medical costs that have remained low since the recession ended in 2009.

Home Depot Inc. slid 0.8 percent to $75.15 and Lowe’s Cos. sank 2.4 percent to $47.83. Cleveland Research analyst Eric Bosshard cut his estimates for both retailers’ third-quarter same-store sales growth, citing moderating demand.

Intuitive Surgical Inc. slumped 4.9 percent to $379.57. The maker of surgical robots said third-quarter net income declined to $156.8 million, or $3.99 a share, from $183.3 million, or $4.46, a year earlier. Revenue dropped 7.2 percent to $499 million. That fell short of the average estimate of $525.9 million from 18 analysts compiled by Bloomberg.

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