NEW YORK |
NEW YORK (Reuters) – Stocks rose on Wednesday, rebounding from two days of losses, as investors turned their focus to the first prominent results of the earnings season.
Stocks had retreated at the start of the week from the SP 500’s highest point in five years, hit last Friday, on worries about possible earnings weakness.
Shares of Alcoa Inc (AA.N) were down 0.5 percent to $9.08 after early gains, following the company’s earnings release after the bell on Tuesday. The largest U.S. aluminum producer said it expects global demand for aluminum to grow in 2013.
Herbalife Ltd (HLF.N) stock rose 4.2 percent to $39.95 in its most active day of trading in the company’s history after hedge fund manager Dan Loeb took a large stake in the nutritional supplements seller. Prominent short-seller Bill Ackman had previously accused the company of being a “pyramid scheme,” which Herbalife has denied.
Traders have been cautious as the current quarter shaped up like the previous one, with companies recently lowering expectations, said James Dailey, portfolio manager of Team Asset Strategy Fund in Harrisburg, Pennsylvania. Lower expectations leave room for companies to surprise investors even if their results are not particularly strong.
“The big question and focus is on revenue, and Alcoa had better-than-expected revenue,” which calmed the market a little, Dailey said.
Overall, corporate profits were expected to beat the previous quarter’s meager 0.1 percent rise. Both earnings and revenues in the fourth quarter are expected to have grown by 1.9 percent, according to Thomson Reuters data.
The Dow Jones industrial average .DJI gained 61.66 points, or 0.46 percent, to 13,390.51. The Standard Poor’s 500 Index .SPX rose 3.87 points, or 0.27 percent, to 1,461.02. The Nasdaq Composite Index .IXIC gained 14.00 points, or 0.45 percent, to 3,105.81.
Facebook Inc (FB.O) shares rose above $30 for the first time since July 2012, trading up 5.3 percent at $30.59. Facebook, which has been tight-lipped about its plans after its botched IPO in May, invited the media to its headquarters next week.
Clearwire Corp (CLWR.O) shares jumped 7.2 percent to $3.13 after Dish Network (DISH.O) bid $2.28 billion for the company, beating out a previous Sprint (S.N) offer and setting the stage for a takeover battle for the wireless service provider that owns crucial mobile spectrum.
Apollo Group Inc (APOL.O) slid after heavier early losses, a day after it reported lower student sign-ups for the third straight quarter and cut its operating profit outlook for 2013. Apollo’s shares were last off 7.8 percent at $19.32.
Volume was below the 2012 average of 6.42 billion shares traded per day, as 6.10 billion were traded on the New York Stock Exchange, NYSE MKT and Nasdaq.
Advancing stocks outnumbered declining ones on the NYSE by 2,014 to 963, while on the Nasdaq advancers beat decliners 1,603 to 859.
(Reporting by Gabriel Debenedetti; additional reporting by Angela Moon; Editing by Nick Zieminski)