Stocks: Weekly review
Asian stocks fell, dragging the regional index toward its first loss in four weeks, after China reported that inflation in the world’s second-largest economy increased faster than estimated, increasing speculation that the government will need to do more to contain growth.
China Resources Land Ltd., a state-controlled developer, slid 2 percent in Hong Kong. Belle International Holdings Ltd., China’s largest retailer of women’s shoes, sank 1 percent. Fanuc Corp., the robot maker which counts Asia including China as its biggest market for sales, dropped 1.1 percent. Infosys Technologies Ltd., India’s second-largest software exporter, tumbled 9.6 percent in Mumbai after posting profit that missed estimates. BHP Billiton Ltd., the No. 1 mining company, slid 1 percent after metal prices declined for a fourth day.
The MSCI Asia Pacific Index fell 0.5 percent to 135.75 as of 8:17 p.m. in Tokyo. About twice as many shares declined as advanced. The measure is headed for a 0.6 percent decline this week, after rising for the past three weeks as Japanese companies resumed production after last month’s earthquake, and as an improving U.S. economy bolstered optimism the global recovery can be sustained.
European stocks fell for the first week in four as Alcoa Inc. and Google Inc. kicked off the U.S. earnings season with weaker-than-estimated results and Japan raised the severity rating of its nuclear crisis.
Kazakhmys Plc, Kazakhstan’s biggest copper producer, and Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, sank more than 7 percent as the metal had the biggest weekly drop in a month. Commerzbank AG tumbled 16 percent as it sold conditional mandatory exchangeable notes to investors as part of a capital increase. National Bank of Greece SA fell 8.1 percent as the nation’s bonds declined.
The benchmark Stoxx Europe 600 Index slid 1.4 percent this week.
U.S. stocks rose, trimming a second straight weekly drop for the Standard & Poor’s 500 Index, as higher-than-estimated data on consumer confidence and manufacturing bolstered optimism about the economy.
Merck & Co. and Kraft Foods Inc. helped pace gains in the Dow Jones Industrial Average. Charles Schwab Corp., the largest independent brokerage by client assets, rallied 3.2 percent as earnings and sales exceeded analysts’ estimates. Google Inc. tumbled 7.4 percent to drag technology shares lower after earnings trailed projections following a jump in costs. Bank of America Corp. fell 1.7 percent as executives said profitability from lending may come under pressure.
The S&P 500 rose 0.5 percent to 1,320.51 at 2 p.m. in New York, trimming its weekly loss to 0.6 percent. The Dow average climbed 69.89 points, or 0.6 percent, to 12,355.04.
Gauges of utility and health-care companies led the gains in the S&P 500. The index lost 1 percent this week through yesterday as sales at Alcoa Inc. missed estimates and the International Monetary Fund cut its growth forecast for the world’s largest economy. The gauge has still risen 4.5 percent in 2011 through yesterday amid government stimulus measures and higher-than-estimated corporate profits.
Stocks turned higher after the Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 69.6, higher than forecast, from March’s 67.5 reading that was the lowest since November 2009. The gauge was projected to rise to 68.8, according to the median forecast of 66 economists surveyed by Bloomberg News.
Manufacturing in the New York region expanded in April at the fastest rate in a year. The Federal Reserve Bank of New York’s general economic index rose to 21.7 from 17.5 in March. Economists projected a reading of 17, based on the median forecast in a Bloomberg News survey. A separate report showed industrial production increased more than forecast in March, led by a rebound in consumer goods manufacturing. Output rose 0.8 percent, the fifth straight gain, the Federal Reserve said.
Federal Reserve Bank of Chicago President Charles Evans said low inflation and high unemployment both call for continued easy U.S. monetary policy, and there’s little evidence of emerging asset bubbles. The consumer-price index rose 0.5 percent last month, in line with the economist forecasts.
Merck gained 2.4 percent to $34.66. The second-biggest U.S. drugmaker retained limited rights to a share of revenue from the arthritis drug Remicade after a settlement ended its dispute with partner Johnson & Johnson.
Charles Schwab advanced 3.2 percent to $18.80. Net income climbed to $243 million from $6 million in the year-earlier period, the San Francisco-based company said in a statement today. Last year, Schwab had $196 million in litigation expenses for a settlement related to its YieldPlus mutual fund. Adjusted earnings were 20 cents a share, compared with the average analyst forecast of 19 cents a share according to a survey.
Mattel Inc. climbed 3.8 percent to $26.71. The maker of Barbie dolls posted first-quarter earnings excluding some items that exceeded analysts’ average estimate by 6.4 percent, data show.
Google slumped 7.4 percent to $535.93. The world’s largest Internet-search company reported profit that missed analysts’ estimates after spending more on hiring and marketing to ward off competition from Facebook Inc. and Apple Inc. First-quarter net income climbed 18 percent to $2.3 billion, or $7.04 a share. Profit excluding some items was $8.08 a share, below the average $8.12 analyst estimate.
Bank of America fell 1.7 percent to $12.91. First- quarter earnings decreased 36 percent to $2.05 billion, or 17 cents a share. The bank also replaced its chief financial officer, citing family reasons. Results missed the average estimate for adjusted earnings of 26 cents a share from 28 analysts.
Higher oil prices and supply disruptions from Japan’s March 11 earthquake prompted JPMorgan Chase & Co.’s Thomas Lee to cut his 2011 profit estimate for the S&P 500. Lee, the chief U.S. equity strategist, reduced his projection to $96.50 a share from $97.50, according to a report sent to clients yesterday. That compares with the average strategist estimate of $94.34 in a survey.