Thursday, April 10, 2008

U.S. Stocks Gain, Led by Retailers, Technology; Wal-Mart Rises

By Eric Martin

April 10 (Bloomberg) -- U.S. stocks rose for the first time in three days on improved forecasts for technology company earnings and higher sales at discount retailers.

Intel Corp., the world's largest chipmaker, led semiconductor shares to a two-month high after analysts said the company will boost profitability and buy back more stock. Cisco Systems Inc., the biggest maker of computer-networking equipment, rallied after Morgan Stanley said revenue may top estimates. Wal- Mart Stores Inc. and Costco Wholesale Corp. advanced as consumers sought discounts on food and electronics.

The Standard & Poor's 500 Index added 6.06, or 0.5 percent, to 1,360.55. The Dow Jones Industrial Average rose 54.72, or 0.4 percent, to 12,581.98. The Nasdaq Composite Index increased 29.58, or 1.3 percent, to 2,351.7. Two stocks gained for every one that fell on the New York Stock Exchange.

``We're overweight technology, we're starting to look at some of the beaten-down consumer discretionary stocks,'' Michael Chren, who helps oversee about $1.5 billion as managing director at Allegiant Asset Management Co. in Palm Beach Gardens, Florida, said in an interview with Bloomberg Television. ``The market will lift off before we get any signs that earnings have troughed. You want to be prepared for that move.''

Shares also gained today after the government said jobless claims decreased last week more than economists had forecast. The S&P 500 has rebounded 6.9 percent from a 19-month low on March 10, with all 10 of its industry groups advancing, after the Federal Reserve cut interest rates and pumped more money into the banking system.

Earnings Watch

Earnings at companies in the index are expected to fall 11.3 percent in the first quarter and 3.5 percent in the second before rebounding to increase 13.9 percent and 54.5 percent in the year's final two quarters of 2008, according to analyst estimates compiled by Bloomberg.

Wal-Mart gained 52 cents to $54.66. March sales advanced 0.7 percent and the company increased its forecast for first-quarter earnings to a range of 74 cents to 76 cents a share, compared with an earlier forecast of 70 to 74 cents.

Costco, the largest U.S. warehouse-club chain, rose 49 cents to $66.52 after March sales at stores open at least a year increased 7 percent.

Cisco climbed 51 cents to $24.04, helping lead technology stocks in the S&P 500 to a 1.5 percent advance. Morgan Stanley said Cisco may beat analysts' revenue estimates in its fiscal third quarter.

``Mid-quarter checks with resellers, distributors, and component suppliers suggest that end-demand held up through the end of March,'' New York-based Morgan Stanley analyst Scott Coleman wrote in a report.

Intel Gains

Intel gained the most among the 30 stocks in the Dow average, adding 66 cents, or 3.1 percent, to $22.08. The world's largest chipmaker was raised to ``buy'' from ``neutral'' at Bank of America Corp., which said the stock may climb more than 26 percent from yesterday's close as the company wins customers from rivals, boosts profitability and buys back more of its own stock.

Earnings for companies in the S&P 500 outside the financial industry are forecast to have grown 6.5 percent in the first quarter, according to the average estimate of analysts surveyed by Bloomberg.

LSI Corp., the maker of chips for companies such as Seagate Technology, increased 27 cents, or 5.1 percent, to $5.61 after Bank of America lifted its rating to ``neutral'' from ``sell.'' Analyst Sumit Dhanda said competition and a slowing economy are already reflected in the stock price.

`Closer to the End'

Financial stocks pared declines after Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said the crisis that's forced almost $250 billion in credit losses and writedowns at the world's biggest finance companies may be approaching an end.

``We're closer to the end than the beginning,'' Blankfein said today at the company's annual meeting in New York. ``We're maybe at the end of the third quarter, or the beginning of the fourth.''

Citigroup Inc., the largest U.S. bank, added 13 cents to $23.71 after earlier falling as much as 2 percent. Wachovia Corp., the fourth-biggest, jumped $1.25, or 4.7 percent, to $27.87. Goldman, the world's largest securities firm, slipped $3.59 to $170.55.

Blankfein's assessment ``reassures the market of the potential degree of surprises that might come out,'' said Robert Stimpson, a portfolio manager at Oak Associates in Akron, Ohio, which manages $1.2 billion, including Goldman shares. ``If we're closer to the end, the probability of unexpected large write-offs or a potential bankruptcy is a lot lower.''


Lehman Brothers Holdings Inc. lost 29 cents to $40.25. The biggest underwriter of U.S. bonds backed by home loans said yesterday it liquidated three investment funds because of ``market disruptions.'' The bank may write down $2 billion in the second quarter and will face ``difficult'' market conditions this year, Deutsche Bank AG analyst Mike Mayo said.

Lehman also bailed out five of its short-term debt funds, joining a growing list of securities firms and asset managers that have propped up investment vehicles crippled by frozen credit markets.

Yahoo! Inc. gained 82 cents, or 3 percent, to $28.59. The owner of the most-visited U.S. Web site, resisting a $44.6 billion takeover by Microsoft Corp., may wring a higher offer out of the software maker after finding an alternate suitor in Time Warner Inc.'s AOL unit.

The New York Times said that News Corp., the media company controlled by Rupert Murdoch, may join Microsoft's offer. Microsoft gained 22 cents to $29.11. News Corp. Class A shares lost 5 cents to $18.89 and Time Warner rose 18 cents to $14.61.

DuPont, Lexmark

DuPont Co. gained 60 cents to $49.64. First-quarter earnings climbed to about $1.29 a share, topping company forecasts, as record crop prices boosted sales of seeds and pesticides to farmers.

Lexmark International Inc., the second-largest U.S. printer maker, rallied $2.55 to $32.91 after Lehman said profit may top analysts' projections. Analyst Caroline Sabbagha boosted her first-quarter earnings forecast to 96 cents a share from 82 cents.

CIT Group Inc., the commercial finance company trying to escape a cash squeeze, fell 70 cents, or 5.4 percent, to $12.36 on concern that first-quarter earnings may be worse than expected. CIT said April 3 that its money-losing student-lending unit stopped making government-guaranteed loans.

Millennium Pharmaceuticals Inc. gained the most since its 1996 initial public offering, soaring $7.99, or 49 percent, to $24.34. Takeda Pharmaceutical Co., Japan's largest drugmaker, agreed to buy the company for $8.8 billion, or $25 a share.

The Russell 2000 Index, a benchmark for companies with a median market value 95 percent smaller than those in the S&P 500, climbed 1.3 percent to 707.42. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 0.6 percent to 13,731.74. Based on its advance, the value of stocks increased by $94 billion.

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