Gannett Co., the biggest U.S. newspaper publisher, jumped 6.9 percent on results that beat estimates. Texas Instruments Inc. climbed before reporting earnings. Caterpillar Inc. surged 4.3 percent after RBC Capital Markets recommended the shares. Banks advanced as the Federal Reserve Bank of New York said it is assessing the use of reverse repurchase agreements to drain record amounts of cash added to the financial system.
“The stock market wants to move higher,” said Michael Levine, a money manager at New York-based OppenheimerFunds Inc., which oversees about $165 billion. “Corporate earnings have been in line or better-than-expected. I see a positive tone through the end of the year.”
The Standard & Poor’s 500 Index climbed 1 percent to 1,098.19 at 1:34 p.m. in New York, adding to gains from a back- to-back weekly advance. The Dow Jones Industrial Average increased 108.83 points, or 1.1 percent, to 10,104.74. The MSCI World Index of 23 developed countries jumped 1.3 percent. Four stocks gained for each that fell on the New York Stock Exchange.
Earnings at U.S. companies probably will exceed analysts’ third-quarter estimates, extending a rally in stocks to year- end, Nomura Holdings Inc. wrote in a note dated Oct. 16. Thirty- four of the 41 companies in the S&P 500 that reported since Oct. 7, including JPMorgan Chase & Co. and Intel Corp., surpassed analysts’ projections, according to Bloomberg data.
Earnings Watch
More than 130 other companies in the S&P 500 are scheduled to report this week. The benchmark index for American equities has rallied 62 percent from a 12-year low in March on speculation the economy is emerging from the worst recession in seven decades.
“We’ll have lots of earnings reports this week,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “The trend so far has been positive and there’s expectation that will continue. That’s positive for stocks. It’s very possible that we near 1,200 on the S&P 500 by the end of the year.”
Analysts surveyed by Bloomberg estimate profits for S&P 500 companies will rebound 65 percent in the last three months of the year after falling for nine straight quarters, the longest streak since the Great Depression.
Gannett, Eaton Gain
Gannett rose 6.9 percent to $13.90. The publisher had third-quarter profit of 44 cents a share on an adjusted basis, beating the average analyst estimate by 3 cents as the decline in print advertising abated.
Eaton Corp. gained 6.7 percent to $64.44. The Cleveland- based manufacturer reported third-quarter profit excluding some items of $1.21 a share, higher than the 95-cent average estimate of analysts in a survey. Eaton also said earnings this year will be higher than previously estimated.
Texas Instruments and Apple Inc. climbed before reporting results. Texas Instruments, the second-largest U.S. chipmaker, rose 2.6 percent to $23.33. Apple, the maker of Macintosh computers, the iPhone and the iPod media player, gained 0.6 percent to $189.19.
Financial shares in the S&P 500 climbed 0.8 percent, reversing a 0.4 percent drop spurred earlier by earnings that trailed estimates at BB&T Corp.Wells Fargo & Co. and Bank of America Corp. added at least 0.5 percent.
The Fed Bank of New York said that over the past year, it has been working with market participants on operational aspects of reverse repos to ensure the tool will be ready when and if the Federal Open Market Committee decides to use it.
‘Bullish for Stocks’
“It’s very bullish for stocks,” said David Lutz, managing director of equity trading at Stifel Nicolaus & Co. in Baltimore. “A reverse repo is actually a way of tightening. It means the economy is functioning well enough, stimulus has worked, and rates need to go higher. That will be positive overall for U.S. investment flows.”
Pacific Investment Management Co., the world’s biggest manager of bond funds, is considering adding stocks for the first time as it expands its line-up of products to investors, a person familiar with the firm’s plans said.
Caterpillar had the biggest gain in the Dow average, rising 4.3 percent to $56.94. The world’s largest maker of construction equipment was rated “outperform” in new coverage at RBC Capital Markets, which cited the company’s cost cutting initiatives.
Motorola Inc. had the steepest gain in the S&P 500, jumping 7.8 percent to $8.47. Oppenheimer & Co. Inc. raised its share estimate for the biggest U.S. mobile-phone maker by 25 percent to $10, saying the introduction of additional devices with other carriers could “add momentum.”
Auto Shares Gain
A gauge of automakers and parts suppliers surged 2.5 percent for the biggest gain in the S&P 500 among 24 industries.
Ford Motor Co. rose 2.7 percent to $7.62. The only U.S. automaker to decline a federal bailout may report “major upside” to third-quarter profit projections, according to analysts at JPMorgan who estimate earnings of 16 cents a share. Analysts on average estimate a loss of 23 cents.
Daimler AG’s U.S. shares surged 6.7 percent to $56.04. The maker of Mercedes-Benz cars and trucks posted third-quarter cash flow and earnings that beat analysts’ estimates. Earnings before interest and taxes reached 470 million euros ($703 million) on sales of 19.3 billion euros, the Stuttgart, Germany-based company said in a statement. UniCredit analyst Georg Stuerzer had predicted EBIT of 246 million euros.
Freeport-McMoRan Copper & Gold Inc., the largest publicly traded copper producer, added 3.9 percent to $78.71 as copper rose to a one-month high. Alcoa Inc., the largest U.S. aluminum producer, advanced 0.9 percent to $14.16 as the metal rose.
Global Rally
Europe’s Dow Jones Stoxx 600 Index added 1.5 percent, while the MSCI Asia Pacific Index gained 0.7 percent. Royal Dutch Shell Plc, Europe’s biggest oil company, rose 2.4 percent in London and Cnooc Ltd., China’s biggest offshore producer, climbed 4.2 percent in Hong Kong.
U.S. stocks rallied even after a report showed that confidence among U.S. homebuilders unexpectedly fell in October on mounting concern sales will retrench once government credits expire. The National Association of Home Builders/Wells Fargo confidence index declined to 18 from a reading of 19 in September that was the highest in more than a year, the Washington-based association said. Figures less than 50 mean most respondents view conditions as poor.
BB&T Slumps
BB&T, the North Carolina lender that acquired Colonial Bancgroup Inc. in August, said third-quarter profit fell to 23 cents a share, missing the average analyst estimate by 2 cents, as more real-estate borrowers stopped making payments. BB&T shares fell 4.8 percent to $26.90.
Hasbro Inc. dropped 3.4 percent to $28.53. The world’s second-largest toymaker said third-quarter sales declined to $1.28 billion on lower prices. Analysts predicted $1.33 billion, the average of 11 estimates.
Today’s gains came on the 22nd anniversary of “Black Monday,” when an increase in U.S. interest rates and slowing economic growth sparked a slump that sent the Dow Jones Industrial Average down 23 percent in one day.
Predictions that U.S. stocks would decline in September and October weren’t wrong, just early, says Mary Ann Bartels, an analyst at Bank of America.
‘Seasonal Weakness’
The S&P 500’s surge from its 12-year low on March 9 compares with rebounds from troughs in March 1938 and October 1974. Bartels cited those two periods as precedents in a report today. Using the earlier rallies as a guide suggests the “seasonal weakness” that stocks often suffer in September and October will occur in November, December and January instead, she wrote.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against those of six major U.S. trading partners, dropped 0.3 percent to 75.351. The U.S. dollar will extend declines as the global economy’s recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management.
Fundamental forces are set to put pressure on the dollar as the recovery gathers momentum, Pimco’s strategic adviser Richard Clarida wrote on the company’s Web site. Those forces include massive budget deficits, bets the Federal Reserve will keep borrowing costs near zero for an extended period, and prospects for a double-dip recession in the U.S., he said.
“An orderly decline in the dollar may help to rebalance global investment portfolios if, as expected, global investment flows -- both official and private -- continue to diversify away from U.S. assets,” Clarida said.
To contact the reporter on this story: Rita Nazareth in New York at
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