U.S. Stocks Advance as AT&T, McDonald’s Top Earnings Estimates

Oct. 22 (Bloomberg) -- U.S. stocks advanced as better-than- estimated earnings at AT&T Inc. and McDonald’s Corp. overshadowed a bigger-than-projected increase in jobless claims.

AT&T added 1.1 percent after new iPhone and television customers bolstered earnings. McDonald’s climbed 2.4 percent following a better-than-projected increase in global comparable sales. Gains were limited by a Labor Department report that initial applications for jobless benefits rose to 531,000 last week.

The S&P 500 increased 0.1 percent to 1,082.69 as of 9:37 a.m. in New York. The Dow Jones Industrial Average added 30.38 points, or 0.3 percent, to 9,979.74.

The S&P 500 is trading at its highest valuation in five years after climbing 60 percent from a 12-year low in March as the government lent, spent or guaranteed $11.6 trillion to combat the worst recession since the 1930s. The index is valued at more than 20 times the reported operating profits of its companies, twice its price-earnings ration on March 6.



Stocks in Europe and Asia retreated on speculation that China may consider withdrawing stimulus measures after economic growth accelerated.

AT&T, McDonald’s

AT&T added 1.1 percent to $26.23. Third-quarter profit excluding some items was 53 cents a share, beating the average analyst estimate by 3 cents.

McDonald’s rose 2.4 percent to $59.75. Earnings were $1.15 a share. The average analyst estimate in a Bloomberg survey was $1.11 a share.

EBay, the most visited U.S. e-commerce site, sank 4.9 percent to $23.80 after a shift to faster-growing yet lower- margin businesses hampered its profit forecast.

Amgen Inc., the world’s largest biotechnology company, dropped 3.9 percent to $57.06 on lower third-quarter sales.

Europe’s Dow Jones Stoxx 600 Index slid 1.2 percent, while the MSCI Asia-Pacific Index lost 1 percent.

China’s economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession. The acceleration in growth spurred concerns policy makers may consider withdrawing fiscal and monetary measures in coming quarters. Gross domestic product rose 8.9 percent in the third quarter from a year earlier.

U.S. stocks dropped in the final hour of trading yesterday after analyst Dick Bove downgraded Wells Fargo & Co., erasing a rally spurred by better-than-estimated results at Morgan Stanley and Yahoo! Inc.

The U.S. may lose its Aaa rating if the budget deficit isn’t cut within the next 3-4 years, Reuters reported, citing an interview with Steven Hess, head U.S. analyst for Moody’s Investors Service. Hess said the country’s Aaa rating “is not guaranteed,” the news service reported, in a dispatch carried in the Indian Economic Times.