US stocks advanced, giving the Standard & Poor’s 500 Index its biggest weekly rally since February, after Oracle Corp.’s profit forecast beat analyst estimates and the rate of economic growth was revised higher.
The Australian dollar advanced too, hitting a high of 102.94 US cents - a record since seamless steel pipe it began trading freely in 1983 - before easing back to 102.6 US cents. It was also buying 72.8 euro cents, 64 pence and 83.5 yen.
Oracle, the world’s top supplier of database software, climbed 1.6 per cent. US shares of Accenture Plc, the world’s second-largest technology-consulting firm, rallied 4.5 per cent after its sales forecast beat analyst’s projections. Bristol- Myers Squibb Co. advanced 3.3 per cent after the pharmaceutical company won US approval a melanoma drug.
The S&P 500 gained 0.3 per cent to 1,313.80 at 4 p.m. in New York. The gauge climbed 2.7 per cent this week. The Dow Jones Industrial Average advanced 50.03 points, or 0.4 per cent, to 12,220.59 today, bringing the week’s advance to 3.1 per cent. The Nasdaq Composite Index added 6.64 points, or 0.24 per cent, to 2,743.06, extending the week’s gain to 3.8 per cent.
Australian shares were poised to open slightly lower when trading resumes on Monday. The SPI futures index was down 9 points at 4764. At the market close of Friday, the benchmark S&P/ASX200 index was 43 points, or 0.91 per cent, higher at 4742.6, capping its best weekly gain - 2.4 per cent - since November. The broader All Ordinaries index rose 46.1 points, or 0.96 per cent, to 4840.3.
The Chicago Board Options Exchange Volatility Index, which bridge rectifier measures the cost of using options as insurance against declines in the S&P 500, fell 0.5 per cent to 17.91, extending its retreat since March 16 to 39 per cent.
“Corporations are making money amid this pace of economic growth,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has about $US90 billion in client assets.
“We saw a solid GDP number. The fact that Oracle reported a decent forecast would be consistent with that trend. As long as the data is supporting the recovery, the S&P 500 can get to $US100 a share of earnings over the next year and a half. That means the index rising to 1,500.”
Recouping losses
US stocks rose yesterday, recouping losses that followed Japan’s March 11 earthquake, as corporate profits beat estimates and a government report showed a decline in jobless claims. The S&P 500 has advanced 4.5 per cent in 2011, extending last year’s 13 per cent rally, amid government stimulus measures and an eighth straight quarter of higher-than-estimated earnings.
The US economy grew at a 3.1 per cent annual rate in the fourth quarter, led by a jump in consumer spending that will be hard to match early in the year as energy prices surge. The revised increase in gross domestic product compares with a 2.8 per cent estimate issued last month, figures from the Commerce Department showed today in Washington.
Stocks rose even as the Thomson Reuters/University of Michigan final index of consumer sentiment decreased to 67.5 from 77.5 in February. The preliminary estimate issued earlier this month was 68.2. The median forecast of 67 economists surveyed by Bloomberg News projected a reading of 68.
Emergency aid
European Union leaders at a two-day meeting in Brussels agreed to cut the startup capital for the future euro emergency aid mechanism, while Portugal continued to rule out a rescue after the parliament’s rejection of budget cuts led Prime Minister Jose Socrates to offer to quit.
A bailout may total as much as 70 billion euros ($97 billion), two European officials with direct knowledge of the matter said, as credit-rating cuts threatened to deepen Portugal’s debt woes.
“The market has digested a lot of uncertainties in the past couple of weeks, with the tragedy in Japan and the unrest in Libya,” said Charles Stamey, who helps manage $US42 billion at Manning & Napier
Advisors Inc. in St. Petersburg, Florida. “I certainly think the market is looking for some good news and this is a bit of it,” he said of Oracle’s forecast.
Oracle climbed 1.6 per cent to $US32.64 after the company late yesterday forecast profit Coach Bags excluding acquisition costs and some other expenses of 69 cents to 73 cents this quarter, beating the average analyst estimate of 66 cents. Earnings on that basis were 54 cents a share in the period that ended Feb. 28, also exceeding analysts’ projections.
Accenture rallies
Accenture added 4.5 per cent to $US54.29. Third-quarter net revenue, or sales before reimbursements, will grow to a range of $US6.3 billion to $US6.5 billion, the Dublin-based company said. The average analyst estimate in a Bloomberg survey was $US6.08 billion. The company also increased forecasts for full-year net revenue growth to a range of 11 per cent to 14 per cent, from 8 per cent to 11 per cent, and for earnings per share to $US3.22 to $US3.30, from $US3.08 to $US3.16.
“Very robust results from enterprise bellwethers Oracle and Accenture will reassure people that the enterprise capex cycle remains a powerful tailwind,” London-based analysts Jonathan Tseng and Andrew Griffin at BofA Merrill Lynch Global Research wrote in a report to clients.
Bristol-Myers Squibb rose 3.3 per cent to $US27.29. The pharmaceutical company won US approval for ipilimumab, the first drug in a new family of medicines to treat advanced melanoma, the most deadly form of skin cancer.
Smithfield Foods Inc. gained 2 per cent to $US24.44. The world’s biggest pork processor said it sees no “backup” in Japanese orders and that the nation is shifting to fresh pork, according to a Barclays Plc presentation.
Research In Motion Ltd. slumped 11 per cent to $US56.89 after the axial fan maker of the BlackBerry smartphone forecast first-quarter revenue and profit that trailed estimates.
Earnings will be $US1.47 to $US1.55 a share as the company spends more on research and steps up marketing for its PlayBook tablet and new smartphones, RIM said late yesterday. Analysts had predicted profit of $US1.66 on average, excluding some costs.
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