BL: U.S. Stocks Advance, Led by Shares of Banks, Energy Producers
By Elizabeth Stanton
April 15 (Bloomberg) -- U.S. stocks rose for the first time in three days, led by financial and energy shares, on better- than-forecast earnings at regional banks and record prices for oil and gasoline.
Regions Financial Corp. and M&T Bank Corp. rallied, leading financials to their first advance in a week, after profits were boosted by their sale of stakes in Visa Inc. as part of the credit-card company's initial public offering. Exxon Mobil Corp. and ConocoPhillips led energy producers to the highest level since January as crude climbed above $114 a barrel.
The Standard & Poor's 500 Index climbed 6.11 points, or 0.5 percent, to 1,334.43. The Dow Jones Industrial Average rose 60.41, or 0.5 percent, to 12,362.47. The Nasdaq Composite Index increased 10.22, or 0.5 percent, to 2,286.04. Almost two stocks rose for every one that fell on the New York Stock Exchange.
``Now is a good time to begin going into financials,'' Daniel Bandi, who manages about $2.5 billion as chief investment officer of Integrity Asset Management LLC in Independence, Ohio, said in a Bloomberg Television interview. ``You want to be there when the market senses that the end is coming, because that's going to be a pretty sharp rebound.''
Stocks also gained after the Federal Reserve Bank of New York's general economic index showed unexpected growth in manufacturing, overshadowing a gain in wholesale inflation that was almost twice economists' forecasts. The S&P 500 declined in four of the previous five trading sessions after Wachovia Corp. posted an unexpected loss and profits missed analysts' estimates at Alcoa Inc. and General Electric Co.
Regions Financial, M&T
Regions Financial increased $1.56, or 8.4 percent, to $20.12 after saying first-quarter net income increased 1.1 percent to 48 cents a share. Excluding merger-related charges, Regions earned 55 cents a share, topping the 48-cent average of 19 analysts surveyed by Bloomberg. Regions had a gain of $91.2 million from the sale of shares in Visa and a reduction in previously reported litigation expenses tied to the bank's ownership in the card network.
M&T rallied $5.11, or 6.3 percent, to $85.86, the biggest gain in almost a month. The bank, which counts Warren Buffett's Berkshire Hathaway Inc. among its biggest shareholders, recorded a $29 million gain from its Visa stake.
Northern Trust Corp., a fund manager and custody bank, also reported a gain from selling shares in the credit-card company's $19 billion initial public offering in March. Northern Trust's first-quarter earnings more than doubled. Its shares rose $3.04, or 4.7 percent, to $68.04.
`Worst Is Behind'
Financial shares also advanced after Richard Fuld, chief executive officer of Lehman Brothers Holdings Inc., told shareholders at an annual meeting that ``the worst is behind us'' in the credit-market contraction that has cost the world's biggest banks and brokerages $245 billion so far.
The S&P 500 Financials Index climbed 1.1 percent, its first advance in six days and biggest in two weeks. Morgan Stanley, the second-biggest U.S. securities firm, added 55 cents to $43.52. Citigroup Inc., the country's largest bank by assets, increased 29 cents to $22.80.
Charles Schwab Corp. added $1.64, or 9 percent, to $19.95. The largest discount brokerage by customer assets said first- quarter profit rose 29 percent as clients opened the most accounts in almost seven years.
Energy Gains
Exxon Mobil Corp., the biggest U.S. oil company, climbed $1.10 to $90.80. Chevron Corp., the No. 2, added 87 cents to $90.17. Crude oil rose to $114.08 a barrel, while gasoline climbed to $2.881 a gallon in New York trading, both records.
BJ Services Co., the third-largest U.S. provider of pressure-pumping services for oil and gas wells, added $1.38 to $30.50. Range Resources Corp., an oil and natural gas producer, increased $2.22 to $69.07, an 18-year high.
Industrial shares in the S&P 500 climbed 0.4 percent as a group after the New York Fed's manufacturing index rose to 0.6 in April from a March reading of minus 22.2 that was the lowest on record. Readings below zero signal contraction. Economists in a Bloomberg survey had forecast a reading of minus 17.
Textron Inc., the world's biggest maker of business jets through its Cessna unit, added $1.56 to $59.80. United Technologies Corp., the maker of Otis elevators, climbed 85 cents to $70.84.
Compuware Corp. added 76 cents, or 11 percent, to $7.75 for the biggest gain in the S&P 500. The supplier of business software reported fourth-quarter sales and earnings that exceeded analysts' estimates.
Cognizant Technology Solutions Corp. added $2.35, or 8.7 percent, to $29.32. The provider of computer services in India rose the most in two months after rival Infosys Technologies Ltd. said U.S. clients may send more work overseas to cut costs.
'Bottoming Process'
About 1.2 billion shares changed hands on the New York Stock Exchange, the fourth lowest of the year. Trading over the past two weeks averaged 29 percent less than in the first quarter, when it was on pace for a record.
The decline may signal investors are done unloading shares after the S&P 500 posted its biggest loss in five years last quarter, said King Lip, who helps manage about $200 million at Baker Avenue Asset Management in San Francisco.
``Light volume is actually a good thing,'' Lip said. ``Market bottoms are formed not when everyone's emotional and throwing things out the door but when volume is low. From our perspectives, we think this is a bottoming process for the market.''
The number of shares traded daily on the NYSE has averaged 1.30 billion this month, compared with an average of 1.36 billion during the same period in the last nine years, according to data compiled by Bloomberg.
EMC Drops
EMC Corp., the world's largest maker of storage computers, slumped 47 cents, or 3.2 percent, to $14.17. Citigroup Inc. analyst Paul Mansky reduced his rating on the shares to ``hold'' from ``buy'' and cut his share-price forecast to $17 from $22, saying the ``economic crisis'' is hurting companies outside the financial services industry and countries other than the U.S.
``People have been nervous about technology earnings since the beginning of the year,'' said Mark Bronzo, portfolio manager at Security Global Investors in Irvington, New York, which manages $11 billion. With Intel Corp. reporting after the close of trading, ``we're getting the beginning of earnings season and people are nervous and it's very reasonable for them to be so.''
Some of those concerns were alleviated after financial markets closed when Intel, the world's biggest chipmaker, issued a sales forecast that may top analysts' estimates. Second-quarter revenue will be $9 billion to $9.6 billion, Intel said. Analysts surveyed by Bloomberg had estimated $9.25 billion. The shares, which gained 22 cents to $20.91 in the regular session, jumped 8 percent to $22.58 in after-hours trading.
Profit Watch
Profits at companies in the S&P 500 are expected to fall 12.3 percent in the first quarter, according to analyst estimates compiled by Bloomberg. Technology company earnings currently are forecast to grow 7.2 percent in the first quarter, down from projected growth of 22 percent at the beginning of the year, according to Bloomberg data.
Delta Air Lines Inc. and Northwest Airlines Corp. led a drop in airlines as investors questioned whether the savings from their merger would be enough to overcome surging fuel bills. Delta's purchase of Northwest for $3.63 billion in stock would create the world's largest airline and produce a total of $1 billion in new revenue and cost cuts, the companies said.
Delta fell $1.32 to $9.16. Northwest dropped 94 cents to $10.28.
Forest, Northrop
State Street Corp., the world's largest money manager for institutions, fell the most in five years on concern the company will be forced to bail out four mortgage-backed debt funds that are sitting on $1.49 billion of potential losses. The shares lost $7.63, or 10 percent, to $69.23, the steepest drop in the S&P 500.
Forest Laboratories Inc. fell $3.67, or 9.2 percent, to $36.13 for the second-biggest decline. The maker of the antidepressant Lexapro forecast sales and profit that missed analysts' estimates. Forest boosted spending to develop new products as Lexapro and the Alzheimer's drug Namenda, which together account for 80 percent of revenue, face patent expirations in 2012 and 2013.
Northrop Grumman Corp. lost $5.27, or 6.9 percent, to $71.57, its biggest drop in five years. The third-largest U.S. defense company said it will take a first-quarter charge of as much as $360 million because of delays on a new ship.
Manitowoc, Affymetrix
Manitowoc Co. fell $3.61 to $36.05. Bank of America Corp. and Sterne, Agee & Leach cut ratings on the biggest U.S. ice- machine maker a day after it purchased Enodis Plc to become the world's largest supplier of catering equipment. The acquisition ``could weigh on shares, given a mixed view to an expanded food- service component,'' Bank of America analyst Seth Weber wrote in a research note.
Affymetrix Inc. tumbled $5.38 to $10.95. The maker of tools used to analyze genes lowered its full-year revenue forecast, citing expectations for reduced research spending by pharmaceutical and industrial customers.
Crocs Inc. fell $7.68, or 43 percent, to $10.11. The maker of colorful clogs said it will fire its 600 Canadian plant workers after lowering annual earnings and sales forecasts as consumer spending slowed.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
Last Updated: April 15, 2008 19:01 EDT
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