U.S. stocks rose for the fifth week,
giving the Standard & Poor’s 500 Index the longest rally since
March, amid better-than-expected earnings and optimism that
global central banks will take actions to stimulate growth.
Cisco Systems Inc., Alcoa Inc. and Hewlett-Packard (HPQ) Co. rose
at least 7.3 percent, driving the Dow Jones Industrial Average (INDU)
to its longest winning streak since October. Raw-material
producers rose the most among 10 S&P 500 groups, as
International Flavors & Fragrances Inc. (IFF) climbed 11 percent on
better-than-estimated earnings. Knight Capital Group Inc., the
firm driven to the brink of bankruptcy by trading losses,
tumbled 28 percent after receiving a cash infusion.
The S&P 500 advanced 1.1 percent for the week to 1,405.87,
extending its 2012 gain to 12 percent. The Dow climbed 111.78
points, or 0.9 percent, to 13,207.95. The Chicago Board Options
Exchange Volatility Index (VIX), a benchmark gauge for options that
protect against losses in the S&P 500, slipped 5.8 percent to
14.74, the lowest level since March.
“The risk-on trade is back,” Scott Armiger, a money
manager at Christiana Trust in Greenville, Delaware, which has
$11 billion in client assets, said in a phone interview.
“People think things are on a much better footing now. No
matter what they do, it’s either if the numbers are good, then
we’re recovering, or if the number are bad, the Federal Reserve
will stimulate and we’ll still move up.”
Equities advanced as German Chancellor Angela Merkel backed
a bond-buying proposal by the European Central Bank. A collapse
in China’s exports added to signs the global economy is
weakening, stoking speculation the government will step up
measures to support expansion. In the U.S., central bank
officials debated whether more action is needed to stimulate
Fed Bank of Boston President Eric Rosengren said the
central bank should pursue an “open-ended” easing program of
“substantial magnitude,” while his counterpart in Dallas,
Richard Fisher, said adequate economic stimulus already is in
place. The San Francisco Chronicle reported that Fed Bank of San
Francisco President John Williams said the lack of progress in
reducing the unemployment rate and the slow economic recovery
have convinced him it’s time to move ahead with a third round of
“In light trading, the markets are moving on rumors of
monetary policy around the globe,” Chad Morganlander, a Florham
Park, New Jersey-based fund manager at Stifel Nicolaus & Co.
which oversees more than $130 billion of assets, said in a phone
interview. “Any word from a central banker in the U.S. or
Europe can send the markets up with very little volume.”
About 5.7 billion shares a day changed hands on U.S.
exchanges for the week, 15 percent lower than the daily average
volume of 6.73 billion shares this year through Aug. 3,
according to data compiled by Bloomberg.
Bets on global central bank action to stimulate the economy
have driven the S&P 500 up 10 percent since June 1. The index is
at the highest level since April 3, also helped by better-than-
estimated corporate profits. About 72 percent of S&P 500
companies that reported quarterly results have beaten estimates,
according to data compiled by Bloomberg, even as sales missed
forecasts at 59 percent of companies.
An S&P 500 index (SPX) of technology companies advanced 2.1
percent during the week.
Cisco (CSCO) climbed 7.3 percent to $17.54. The biggest maker of
computer-networking equipment was added to Goldman Sachs Group
Inc.’s “conviction buy” list while Piper Jaffray Cos. boosted
the stock to overweight, an equivalent of buy. Cisco trimmed its
gain on the final day, falling 0.9 percent, after Ryan
Hutchinson, an analyst at Lazard Capital Markets LLC, said the
outlook for the company may be worse than estimated.
Hewlett-Packard gained 7.9 percent to $19.70. The world’s
largest maker of personal computers raised its profit forecast
and appointed a new head for its enterprise services unit as it
restructures the business.
Computer Sciences Corp. (CSC), a technology contractor for
government and corporate customers, surged 26 percent, the most
since 1980, to $31.32 after topping estimates with its quarterly
results and annual forecast.
The S&P gauge of raw materials producers rallied 2.8
percent, the most since June. International Flavors & Fragrances
jumped 11 percent to $61.43. The maker of scents and tastes for
food and household products reported quarterly earnings that
exceeded the average analyst estimate by 5 percent, the most in
more than a year, according to data compiled by Bloomberg.
Fossil Inc. (FOSL), a maker of jewelry and leather goods, surged
26 percent to $86.47 after forecasting earnings that exceeded
analysts’ projections amid increasing sales of its Skagen brand.
Chesapeake Energy Corp. (CHK) advanced 10 percent to $19.68. The
second-largest U.S. natural-gas producer reported the highest
quarterly profit in company history and boosted its asset-sales
target to avoid a funding shortfall. The shares slid 3.1 percent
on the final day of the week after the company said it received
a subpoena in June from the antitrust division of the U.S.
Justice Department’s Midwest Field Office.
Dean Foods Co. (DF), the biggest U.S. dairy processor, surged 36
percent to $16.63 as its WhiteWave unit filed to raise $300
million in a U.S. initial public offering. The parent company
boosted its full-year profit forecast as second-quarter results
beat analysts’ estimates.
Best Buy Co. gained 8.9 percent to $19.21. Founder Richard
Schulze, who stepped down as chairman in June, offered to take
the electronics retailer private at $24 to $26 a share.
Knight (KCG) plunged 28 percent to $2.90. The company, whose
computer malfunction spewed orders through exchanges Aug. 1 and
led to a $440 million loss, was saved from insolvency after
receiving a $400 million cash infusion through the sale of
convertible securities to a consortium of investors. The bailout
would reduce the stake of existing shareholders by more than 70
percent. Shares have tumbled 72 percent since its $10.33 closing
price before the software malfunction.
Priceline.com Inc. (PCLN) erased 15 percent to $563.16. The
biggest U.S. online travel agency by market value forecast
third-quarter earnings that trailed analysts’ estimates as
turmoil in Europe curtailed trip reservations in the region.
Yahoo! Inc. (YHOO) slid 5.1 percent $15.15. Chief Executive
Officer Marissa Mayer has embarked on a strategy that may result
in a reversal of plans to restructure operations and return
billions of dollars in cash to shareholders. The review could
mean that the company alters plans to return to shareholders the
proceeds from the sale of Yahoo’s stake in Alibaba Group Holding
Ltd., Yahoo said in a regulatory filing.
Monster Beverage Corp. (MNST) slumped 19 percent, the most in the
S&P 500, to $54.27. The largest U.S. energy drink maker by
volume sales reported second-quarter profit and revenue that
trailed analysts’ estimates as costs increased. Monster also
said an unspecified attorney general is investigating the
company’s flagship drink and ingredients.
To contact the reporters on this story:
Lu Wang in New York at
Julia Leite in New York at
To contact the editor responsible for this story:
Lynn Thomasson at