Stocks advanced Friday, sending the Standard & Poor’s 500-stock index to the biggest weekly gain in a year, amid optimism about earnings reports and a rally in metals producers.
The S&P 500 rose 0.7 percent to 1,077.96, giving it a 5.4 percent rally in a week shortened by the Independence Day holiday. The Dow Jones industrial average gained 59.04 points, or 0.6 percent, to 10,198.03; the gauge of blue-chip stocks finished up 5.3 percent for the week. Fewer than 6.7 billion shares traded on U.S. exchanges Friday, the lowest trading volume of the year.
“Stocks have more room to go,” said William Stone, chief investment strategist at PNC Wealth Management. “While there are questions about a slowdown and corporate outlooks, we believe we’re not in a double dip.”
The S&P 500 had fallen 16 percent between April 23, when it reached a 19-month high, and July 2. The rally this week was spurred by higher-than-forecast sales at some retailers and a drop in jobless claims.
Profits for companies in the S&P 500 are projected to have increased 34 percent in the April-June period and by the same amount in 2010, according to analysts’ estimates compiled by Bloomberg. Corporate profits may grow 25 percent in the third quarter, the slowest pace of the year. On a per-share basis, earnings rose 52 percent from January through March.
“Investors are in a wait-and-see mode,” said John Praveen, chief investment strategist at Prudential International Investments Advisers. “People are looking for data to show that we’re not having a double dip.”
He continued: “Second-quarter earnings will come in much higher than expected. However, investors are looking for corporate outlooks. Investors are trying to gauge if the recent rally is for real.”
Alcoa, the largest U.S. aluminum producer, is scheduled to release quarterly results on Monday. Analysts surveyed by Bloomberg expect on average that the company will announce earnings of 11 cents a share. That compares with a loss of 26 cents in the same period a year ago. Shares of Alcoa rose 2.1 percent to $10.94, helping to lead raw-materials companies to the biggest gain among 10 S&P 500 industries.
Gold rose the most in three weeks on speculation that the lowest prices since May will revive demand. Copper and silver also rallied. Newmont Mining, the largest U.S. gold producer, climbed 2.6 percent, to $61.93. Freeport-McMoRan Copper & Gold, the largest publicly traded copper producer, jumped 4.5 percent, to $65.98.
Financial stocks had the second-biggest gain in the S&P 500 among 10 industries, rising 1.6 percent. Profits at S&P 500 financial firms are estimated to have increased 81 percent in the three-month period ending June 30 from a year earlier, according to analysts’ estimates compiled by Bloomberg.
J.P. Morgan Chase, which reports quarterly results Wednesday, rose 1.8 percent to $38.85. Bank of America gained 1.7 percent to $15.11, while Citigroup advanced 1.8 percent to $4.04; both are set to release results Friday.
The benchmark index for U.S. stock options fell for a sixth day, the longest losing streak since March. The VIX, as the Chicago Board Options Exchange Volatility Index is known, dropped 2.8 percent to 24.98. The index, a commonly used gauge for market volatility, is down from this year’s closing high of 45.79 on May 20.
By Rita Nazareth
Tags: central bank, Dow Jones Industrial, economic, economists, economy recovery, financial stocks, financial system, investment managers, us economic, us stocks
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