Thursday, Aug 16, 2012
--Stocks advance after Germany's Merkel expresses desire to hold together euro zone
--New housing permits jump to highest level in four years
--Facebook slumps 5.9% after "lockups" begin to expire
By Chris Dieterich
NEW YORK--The Dow industrials staged their biggest advance in almost two weeks as investors took heart in German Chancellor Angela Merkel's commitment to hold together the euro zone.
The Dow Jones Industrial Average rose 99 points, or 0.8%, to 13263 in late-afternoon trading, and the Standard & Poor's 500-stock index gained 12 points, or 0.8%, to 1417. Both benchmarks were within striking distance of their 2012 highs. The Nasdaq Composite Index added 36 points, or 1.2%, to 3067.
Technology stocks rose the most, followed closely by growth-sensitive materials stocks. Dow component Cisco Systems surged 10% after the networking company reported quarterly earnings and revenue that topped analysts' estimates and raised its quarterly dividend by 75% to 14 cents a share.
Wal-Mart Stores notched the biggest decline among blue chips, slumping 3% after the retailing giant reported sales that fell short of expectations, countering quarterly earnings that were slightly above estimates.
Facebook fell 5.9% and hit an all-time low in heavy trading volume as lockups that prevented early investors in the social-networking giant from selling their shares began to expire Thursday. Overall, about 2 billion shares will become eligible for sale between now and May, adding to the 421 million shares already in circulation.
European markets finished higher after Ms. Merkel said her country is committed to doing what it can to maintain the euro. The Stoxx Europe 600 rose 0.3%, finishing at a nearly five-month high.
"We feel committed to do everything we can in order to maintain the common currency," Ms. Merkel said at a joint news conference with Canadian Prime Minister Stephen Harper.
"She's saying we're all on the same side," said Andrew Brenner, head of international fixed income at National Alliance Securities. "I'd say it's all kind of working in favor of the bulls."
U.S. economic news was mixed. Home building slipped in July, missing expectations, but new permits rose to their highest level in four years, a possible sign of confidence for construction going forward.
The Philadelphia Federal Reserve's index of manufacturing activity showed a bigger-than-expected contraction in August, one day after a New York reading showed contraction for the first time since December. The number of U.S. workers filing applications for unemployment benefits rose last week, in line with forecasts.
"We think residential construction will continue to support economic growth, but it will be difficult to offset weakness in other parts of the economy, like manufacturing," said Elizabeth Ptacek, senior vice president and real estate analyst at KeyBank in Cleveland.
In Asia, China's Shanghai Composite slipped 0.3% even after Chinese Premier Wen Jiabao hinted at more monetary stimulus in the world's second-largest economy. Other Asian markets were mostly higher, with Japan's Nikkei Stock Average gaining 1.9% to a six-week high. Australia's S&P/ASX 200 also climbed 1.1%.
Crude-oil futures rose 1.3% to finish at $95.60 a barrel, while gold futures settled up 0.8% at $1,616.10 a troy ounce. The dollar fell against the euro and gained ground against the yen. The yield on benchmark 10-year Treasurys rose to 1.85%.
Agilent slumped 8%, the biggest decline on the S&P 500, after the testing-and-measuring equipment maker's fiscal third-quarter earnings fell short of expectations and its full-year outlook was reduced, citing an environment of "much slower growth."
Perrigo fell 6.8%. The store-brand pharmaceutical and nutritional-products maker saw higher sales last quarter, but revenue missed estimates again.
Video-game maker Electronic Arts jumped 5.7% after a news report said the company, which is struggling against competition from free online-gaming sites, is exploring a sale. The New York Post said private-equity giants KKR and Providence Equity Partners approached the company about a potential deal. Electronic Arts didn't reply to requests seeking comment.
PetSmart rallied 4.4% after the pet-products retailer reported better-than-expected fiscal second-quarter results and raised its full-year earnings and sales-growth outlooks.
Sears Holding rose 7.1% after the retailer reported a second-quarter loss that narrowed on the company's cost-cutting measures, although sales declined more than expected.
Hi-Crush Partners rose 18% in its public debut after opening flat with its initial-public-offering price of $17. The company produces premium monocrystalline sand, which is used to improve the recovery of oil and gas during hydraulic-fracturing drilling.
Write to Chris Dieterich at firstname.lastname@example.org
(END) Dow Jones Newswires
August 16, 2012 15:55 ET (19:55 GMT)