Wall Street rebounds as technology stocks gain
NEW YORK, Feb 23 — US stocks advanced yesterday, rebounding after two days of losses, led by gains in technology stocks after better-than-expected earnings from Hewlett-Packard.
The benchmark S&P 500 has shed 1.9 per cent over the past two sessions, its worst two-day drop since early November, putting the index on pace for its first weekly decline of the year.
The retreat was triggered by minutes from the Federal Reserve’s January meeting released earlier in the week which suggested stimulus measures may end earlier than thought.
Still, the index is up nearly 6 per cent for the year and managed to hold the 1,500 support level, despite the recent declines.
“When you get a move like that, you are bound to see a pause and the Fed minutes is a good enough reason to at least reassess,” said Michael Marrale, head of research sales and trading at ITG in New York.
“But if, in fact, things do heat up a bit (in the economy), ultimately we are going to see rates go higher and ultimately, that will take money out of bonds and into equities, which is a major backstop for equities.”
Hewlett-Packard Co jumped 8 per cent to US$18.48 as the top boost on both the Dow and S&P 500 after the No. 1 PC maker’s quarterly revenue and forecasts beat analysts’ expectations as it continued to cut costs under CEO Meg Whitman’s turnaround plan. The S&P technology sector was up 0.4 per cent.
The Dow Jones industrial average rose 62.07 points, or 0.45 per cent, at 13,942.69. The Standard & Poor’s 500 Index gained 7.85 points, or 0.52 per cent, at 1,510.27. The Nasdaq Composite Index added 18.59 points, or 0.59 per cent, at 3,150.08.
Also buoying tech stocks were gains in semiconductor companies Marvell Technology Group Ltd, up 1.6 per cent at US$9.63, and Texas Instruments Inc, up 3.6 per cent at US$33.65. The PHLX semiconductor index gained 1.3 per cent.
Marvell forecast results this quarter that were largely above analysts’ expectations as it gained market share in the hard-disk drive and flash-storage businesses.
Fellow chipmaker Texas Instruments raised its quarterly dividend by a third and said it would buy back an additional US$5 billion in stock.
Abercrombie & Fitch dropped 5 per cent to US$46.57 after the clothing retailer reported a drop in fourth-quarter comparable sales, even as its latest quarterly earnings topped estimates.
Insurer American International Group Inc posted fourth-quarter results that beat analysts’ expectations. Shares advanced 4 per cent to US$38.78.
According to Thomson Reuters data through Thursday morning, of 427 companies in the S&P 500 that have reported results, 69.3 per cent have exceeded analysts’ expectations, compared with a 62 per cent average since 1994 and 65 per cent over the past four quarters.
Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 per cent, according to the data, above a 1.9 per cent forecast at the start of the earnings season. — Reuters