WASHINGTON – U.S. stocks rose, snapping a two-day drop in the Standard & Poor’s 500 Index, amid earnings optimism after Alcoa Inc. reported sales that exceeded projections.
Alcoa gained 0.9 percent as it sold aluminum at a higher- than-expected price. Constellation Brands Inc. added 2.4 percent after the wine producer reported earnings that beat estimates and raised its profit forecast. MasterCard Inc., the second- biggest U.S. payments network, advanced 1.2 percent after being raised at Goldman Sachs Group Inc. Apollo Group Inc., the biggest U.S. for-profit college, slumped 10 percent after net income dropped amid a decline in new enrollment.
The S&P 500 rose 0.3 percent to 1,461.04 at 9:39 a.m. New York time. The Dow Jones Industrial Average added 48.38 points, or 0.4 percent, to 13,377.23. Trading in S&P 500 companies was 29 percent above the 30-day average at this time of day.
“Alcoa’s report got us off to a good start,” said Peter Jankovskis, who helps oversee $3 billion of assets as co-chief investment officer at Lisle, Illinois-based Oakbrook Investments LLC. He spoke in a telephone interview. “Still, earnings growth is going to be a little bit harder to come by. If we see some good results from bellwether companies, that will definitely give a lift to the market.”
Fourth-quarter profits at S&P 500 companies probably increased 2.9 percent, according to analysts’ estimates compiled by Bloomberg. That would be the second-slowest quarterly growth since 2009, the data show.
Alcoa’s results
Alcoa, the first company in the Dow to report results, rose 0.9 percent to $9.18. Aluminum prices are rising as demand in China and the U.S. increases while record amounts are being shut away in warehouses as part of financing deals. Alcoa, which said yesterday that global aluminum demand growth will accelerate to 7 percent in 2013, is trying to avoid a downgrade to junk by Moody’s Investors Services. The ratings company said Dec. 18 it was reviewing its rating.
Constellation Brands added 2.4 percent to $36.94. The company reported third-quarter earnings excluding some items of 63 cents a share, beating the average analyst estimate in a Bloomberg survey by 14 percent.
Seagate Technology Plc climbed 3 percent to $32.32. Sales rose to at least $3.6 billion in the fiscal second quarter, exceeding an earlier forecast for $3.5 billion as the company maintained share in the computer hard-drive market.
MGM Resorts International gained 1.6 percent to $13.16. MGM China Holdings Ltd., a venture between a daughter of casino mogul Stanley Ho and MGM Resorts International, received formal government approval to build its second resort in Macau.
MasterCard rose 1.2 percent to $524.14. The shares were raised to buy from neutral at Goldman Sachs.
Clearwire Corp. surged 7.9 percent to $3.15. The wireless- network operator that agreed to be bought out by Sprint Nextel Corp. last month for $2.97 a share received an unsolicited offer from Dish Network Corp. at a price that’s 11 percent higher. Sprint fell 2.9 percent to $5.80.
Apollo lost 10 percent to $18.81. Competition for students has increased as more traditional universities have begun offering online courses that were once dominated by for-profit colleges. Apollo and its for-profit college competitors have faced scrutiny the past few years from state attorneys general and the U.S. government over their recruiting practices.
Separately, Morgan Stanley downgraded the stock to equal weight, similar to a neutral rating, from overweight.
In unison
Bets that U.S. stocks will move in unison have fallen to the lowest level in more than two years on speculation earnings season will drive investors to companies with the best results.
The Chicago Board Options Exchange S&P 500 Implied Correlation Index has fallen 12 percent to 62.87 since reaching a four-month high in December. The gauge, which uses options to measure expectations about whether S&P 500 companies will move in lockstep, reached 59.76 on Jan. 2, its lowest level since November 2010.
Improvement in the world’s largest economy will reduce the market’s sensitivity to government reports, allowing investors to focus on individual companies, Anthony Benichou of Louis Capital Markets said. The S&P 500’s daily swings during the past month have been in line with the average from last year, according to data compiled by Bloomberg. More than 320 companies in the U.S. equity benchmark are due to release quarterly results in the next month.
“With earnings approaching, we are going to switch from macro to micro, trying to be more selective, and it is going to be a more stock-specific strategy,” Benichou, equity salesman at Louis Capital Markets in London, said in a phone interview yesterday. “It is less about country and sector but more about looking at fundamentals in detail.”
