US Stocks Climb As Housing Data Outweighs Weak Labor, Europe Readings
27 April 2012 - 6:10AM
Dow Jones News
Investors shrugged off disappointing readings on the job market
and euro-zone economic confidence, sending the Standard &
Poor's 500-stock index to 1400 for the first time in nearly three
weeks.
The Standard Poor's 500-stock index rose 11 points, or 0.8%, to
1401 in late afternoon trading. The benchmark turned positive after
better-than-expected housing data Thursday morning and rose further
in the afternoon, headed for its third-straight daily increase.
The Dow Jones Industrial Average added 129 points, or 1%, to
13221. The Nasdaq Composite added 26 points, or 0.9%, to 3055.
"You have strong housing data--which really bodes well for the
American consumer--offset by global macro headwinds," said Seth
Setrakian, co-head of U.S. equities at First New York Securities.
"What people are trying to do is find the best domestic-centric
companies to invest in."
Homebuilders PulteGroup and Lennar rose 9% and 5.5%,
respectively. Software maker Citrix Systems jumped 12% after
raising its 2012 profit forecast and reporting better-than-expected
earnings.
Meanwhile, Exxon Mobil slid 1.3% and United Parcel Service,
considered a barometer of global trade because of the breadth of
its air and truck delivery operations, retreated 2.3% after both
reported profits that missed analysts' expectations.
The number of U.S. home buyers who signed contracts to purchase
previously owned homes rose sharply more than expected in March to
the highest level in nearly two years.
The National Association of Realtors said its seasonally
adjusted index for pending sales of existing homes jumped 4.1% from
a month earlier to 101.4. Economists expected a 1.3% increase,
according to a Dow Jones Newswires survey.
"Home sales being up that 4%, that's a very big positive, and it
shows what the prior gains in jobs and consumer confidence have
provided," said Sean Kraus, chief investment officer of
CitizensTrust in Pasadena, Calif.
Meanwhile, new applications for unemployment benefits fell less
than analysts expected last week, a sign the labor market's
recovery is slowing.
Initial jobless claims decreased by 1,000 to a seasonally
adjusted 388,000, the Labor Department said. Economists expected a
decline to 376,000, according to a Dow Jones Newswires poll. The
department also revised the prior week's reading slightly
higher.
The Kansas City Fed's manufacturing composite index, an average
of the indexes covering production, new orders, employment,
delivery times and raw-materials inventories, fell to 3 in April
from 9 in March. The April index is the lowest since a -2 reading
in December 2011. Readings above zero denote expansion. On a
year-over-year comparison, the composite index remained at 24.
"You had bad economic news all week," said Ron Sloan, senior
portfolio manager at Invesco. "It's a sign of a pretty strong tape
when it can move up through all of that. Probably, these prices
aren't justified."
The European Commission's overall economic sentiment indicator
fell more than expected to 92.8 in April from 94.5 in March.
Economists had been expecting a slight decline to about 94.2.
Most Asian markets firmed, with Japan's Nikkei Stock Average up
less than 0.1% and Hong Kong's Hang Seng Index up 0.8%. China's
Shanghai Composite slipped 0.1%.
Crude-oil futures added 0.4% to $104.48 a barrel, while gold
futures gained 1.1% to settle at $1,659.60 an ounce. The U.S.
dollar fell against the euro and the yen.
In corporate news, Watson Pharmaceuticals jumped 7.5% after it
confirmed plans to buy Swiss rival Actavis, a deal that would make
the suitor the third-largest global generic drug maker.
Aetna slumped 8.3% after the health insurer reported
first-quarter earnings that missed forecasts, with the portion of
premiums paid out to cover medical costs increasing.
H&R Block slid 10% after forecasting lower 2012 revenue than
analysts expected. The tax preparer said it planned to eliminate
350 full-time positions and close about 200 underperforming stores
as part of a strategic realignment aimed at saving $85 million to
$100 million a year by the end of fiscal 2013.
Dow Chemical fell 3.4% after the company's first-quarter
earnings edged above estimates but revenue fell short and gross
margin declined.
Programmable chip maker Xilinx climbed 7.2% after the company
reported fiscal fourth-quarter earnings and revenue that exceeded
expectations.
Skechers surged 15% after the footwear company reported a
narrower-than-forecast loss and said it expects to return to
profitability later this year.
MetroPCS tumbled 11% as it reported sharply slower growth in
pay-as-you-go customers in the first quarter and earnings and
revenue that missed analysts' forecasts.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com
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