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Earnings, Corporate Deals Lift Stocks  04/22 16:38

   Corporate deals and some solid earnings reports propelled the stock market 
to its sixth straight gain Tuesday.

   NEW YORK (AP) -- Corporate deals and some solid earnings reports propelled 
the stock market to its sixth straight gain Tuesday.

   Allergan surged after Valeant Pharmaceuticals said it had teamed up with 
activist investor Bill Ackman to make a bid for the Botox maker. Netflix and 
Harley-Davidson rose sharply after reporting earnings that beat analyst's 
expectations.

   Stocks are rebounding from a slump earlier this month when investors dumped 
high-flying biotechnology and Internet stocks. The gains over the past week 
have been driven by a combination of better economic news and respectable, if 
not spectacular, earnings reports.

   "We were definitely oversold, there's no question about that," said Phil 
Orlando, chief equity strategist at Federated Investors. "Earnings, by and 
large, haven't been worse than we thought and the economic news has actually 
been a little better."

   The Standard & Poor's 500 index rose 7.66 points, or 0.4 percent, to 
1,879.55. The six consecutive gains in the index marks the longest winning 
streak since September.

   The Dow Jones industrial average climbed 65.12 points, or 0.4 percent, to 
16,514.37. The Nasdaq composite gained 39.91 points, or 1 percent, to 4,161.46.

   Allergan rose the most in the S&P 500, climbing $21.65, or 15.2 percent, to 
$163.65. Health care stocks rose 1.04 percent, the biggest gain of the 10 
sectors that make up the S&P 500 index.

   There was also deal news in the health care industry from Europe. Swiss 
pharmaceutical maker Novartis AG unveiled a series of multibillion-dollar deals 
with Britain's GlaxoSmithKline PLC and the U.S.'s Eli Lilly & Co.

   The announcements helped drive some speculative buying.

   "Whenever there are mergers, people start looking for other potential merger 
candidates," said John Carey, a portfolio manager at Pioneer Investments. "So 
it usually drives some other stocks up."

   Overall, first-quarter earnings at S&P 500 companies are expected to fall 
0.8 percent in the first quarter compared with the same period a year earlier, 
and growth of almost 8 percent in the fourth quarter, according to S&P Capital 
IQ data.

   While that would be the first decline in earnings since the third quarter of 
2009, analysts had been expecting worse. So far, about 65 percent of companies 
that have reported their earnings have exceeded analysts' forecasts.

   "It is a familiar dance," said Federated's Orlando. "Managements have gotten 
very adept at doing this: lowering the bar and essentially engineering a modest 
positive surprise."

   The consumer discretionary sector had the second-biggest gain Tuesday after 
some good earnings reports.

   Harley-Davidson jumped $4.33, or 6.4 percent, to $71.87 after reporting that 
its first-quarter earnings rose nearly 19 percent. Motorcycle sales grew 5.8 
percent worldwide and efficiency efforts took hold.

   Netflix climbed $24.41, or 7 percent, to $372.90 after the online video 
streaming service said late Monday that its first-quarter earnings soared. 
Another season of the popular political drama "House of Cards" helped attract 
an additional 2.25 million subscribers.

   Investors even found something to like in a weak report on home sales.

   Sales of existing U.S. homes slipped in March to their lowest level since 
July 2012 as rising prices and a tight supply of available homes discouraged 
many would-be buyers. The National Association of Realtors says sales edged 
down 0.2 percent to a seasonally adjusted annual rate of 4.59 million.

   While it was the seventh drop in the past eight months, the decline was less 
than economists had forecast.

   In government bond trading, prices were little changed. The yield on the 
10-year Treasury note was unchanged at 2.72 percent from late Monday.

   Among other stocks making big moves:

   -- Facebook rose $1.79, or 2.9 percent, to $63.03. Analysts at Credit Suisse 
raised their target price for the stock because they believe that the social 
media company will be able to boost its revenue with new services.

   -- Pentair slumped $5.53, or 6.9 percent, to $74.95 after the flow-control 
company posted an unexpected decline in revenue. Pentair's revenue fell 3 
percent and revenue at its largest division, valves and controls, dropped 9 
percent compared to last year. Pentair said weaker sales to the energy industry 
were the main reason for that decline.

   -- Omnicom fell $1.62, or 2.3 percent, to $69.87 after the advertising 
company's CEO said that the timing of a proposed $35 billion merger with 
France's Publicis Groupe SA remains unclear nine months after the deal was 
announced. 


(KA)


 
 
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