Earnings and Corporate Deals Lift US Stocks
Stocks rose Tuesday as more companies reported solid first-quarter earnings. The market also got a lift from deal news. Netflix rose after announcing a big jump in its profit and Botox maker Allergan rose sharply on a takeover bid.
KEEPING SCORE: The Standard & Poor’s 500 index rose 11 points, or 0.6 percent, to 1,883 as of 3:02 p.m. Eastern time. The Dow Jones industrial average gained 98 points, or 0.6 percent, to 16,548. The Nasdaq composite rose 46 points, or 1 percent, to 4,167.
BOTOX BOUNCE: Allergan jumped $22.48, or 16 percent, to $164.48 after Valeant Pharmaceuticals said that it had teamed up with activist investor Bill Ackman to make a bid for the Botox maker.
STREAK OF GAINS: The S&P 500 closed higher on Monday for a fifth straight day, its longest streak of gains since October. The index has staged a comeback after slumping at the start of the month as investors sold high-flying tech and biotechnology stocks. If the index ends higher Tuesday it will be the longest streak of gains since September.
THE QUOTE: The market’s gains over the past week have been driven by a combination of factors, said Phil Orlando, chief equity strategist at Federated Investors. “We were definitely oversold, there’s no question about that,” Orlando said. “Earnings, by and large, haven’t been worse than we thought and the economic news has actually been a little better.”
UNDERWOOD EFFECT: Netflix rose $20.66, or 6 percent, to $369.15 after the online video streaming service said its first-quarter earnings soared. Another season of the popular political drama “House of Cards” helped attract an additional 2.25 million subscribers.
HOG HEAVEN: Harley-Davidson jumped $4.60, or 7 percent, to $72.14 after it reported a nearly 19 percent rise in first-quarter earnings. Motorcycle sales grew 5.8 percent worldwide and efficiency efforts took hold. The earnings topped Wall Street estimates.
EARNINGS: Overall, first-quarter earnings at S&P 500 companies are expected to fall 1.1 percent in the first quarter compared with the same period a year earlier, according to S&P Capital IQ data. That would be the first decline since the third quarter of 2009.
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. It was the seventh drop in the past eight months, but the decline was less than economists had forecast.
MERGER DELAY: Advertising company Omnicom fell $1.52, or 2 percent, to $69.97 after its CEO said that the timing of a proposed $35 billion merger with France’s Publicis Groupe SA remains unclear nine months after it was announced.
TREASURIES AND COMMODITIES: Bond prices fell. The yield on the 10-year note edged up to 2.73 percent from 2.72 percent late Monday. The price of oil fell $2.24 to $102.13 a barrel.