Stocks advance as internet rally offsets Portugal concern

Bloomberg NewsJuly 12, 2014 

NEW YORK -- U.S. stocks rose Friday, paring the biggest weekly loss since April, as a rally in Inc. and EBay Inc. led an afternoon rebound from declines spurred by concern over financial stress in Europe.

EBay and increased at least 2.3 percent amid optimism in the companies' growth potential. Wells Fargo & Co. slipped after reporting per-share earnings that did not rise for the first time in 18 quarters.

The Standard & Poor's 500 Index rose 0.1 percent to 1,967.51 at 4 p.m. in New York after losing 0.3 percent earlier. It fell 0.9 percent this week. The Dow Jones Industrial Average added 28.25 points, or 0.2 percent, to 16,943.32. The Nasdaq 100 Index rose 0.6 percent.

"People are going to keep one eye on earnings and one eye on peripheral debt," Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion, said in a phone interview. "Debt concerns may trump earnings in the short-term, but as long as we have solid numbers for this quarter, markets overall should be fine."

The S&P 500 fell 0.4 percent Thursday as signs of financial stress among Portuguese banks fueled concern over the strength of the European recovery.

Portugal's second-largest lender sought to reassure investors today by revealing its exposure to related companies after a missed payment on short- term debt by a

member of the group.

The S&P 500 trimmed losses of as much as 1 percent Thursday amid speculation the day's initial selloff was overdone. The gauge slipped 1.1 percent in the first two days of the week on concern equities had risen too far, too fast.

The S&P 500 ended last week at an all-time high, and the index has not had a drop of 10 percent in more than two years. The gauge trades at a valuation of 18 times reported earnings, the highest since 2010.

More than 140 companies in the S&P 500, including Citigroup Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Johnson & Johnson, will report quarterly results between now and July 23, according to data compiled by Bloomberg.

"With the start of earnings season, we're expecting the U.S. to rebound," Nick Skiming, who helps manage $10 billion at Ashburton Ltd., said by phone from Jersey, in the Channel Islands. "The U.S. is pretty clearly on the road to recovery. Their GDP, unemployment, and manufacturing figures are all fairly decent. From an economic view, it is the better place to put your money, a natural safe haven."

The Chicago Board Options Exchange Volatility Index fell 3.7 percent today to 12.12. The gauge known as the VIX has surged 17 percent this week, poised for the biggest rally since April. It finished last week at a seven-year low.

Profit at S&P 500 companies probably rose 4.5 percent in the three months through June, while sales gained 3.1 percent, analyst estimates compiled by Bloomberg show. The projections have decreased from the start of April, when analysts predicted a 7.3 percent jump in earnings and a 3.7 percent sales increase.

Earnings for banks are forecast to fall 3.9 percent in the second quarter, according to data compiled by Bloomberg. It's the only sector expected to see declining profits, the data show.

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