US Stocks Advance on Drop in Jobless Claims, Cisco Earnings
Nov. 5 (Bloomberg) -- U.S. stocks rose, sending theStandard & Poor’s 500 Index higher for a fourth day, as joblessclaims and worker productivity beat forecasts and Cisco SystemsInc. said a global economic recovery spurred a rebound in sales.
Cisco, the biggest maker of networking equipment, gained2.4 percent after earnings topped analysts’ estimates and thecompany expanded its stock buyback plan by $10 billion. ResearchIn Motion Ltd. rose after saying it will repurchase as much as$1.2 billion in shares. All but one of the 30 stocks in the DowJones Industrial Average rose as government data showed initialclaims for unemployment benefits dropped to 512,000 last weekand worker productivity surged at the fastest pace in six years.
The S&P 500 added 0.7 percent to 1,053.47 at 9:36 a.m. inNew York. The Dow increased 89.7 points, or 0.9 percent, to9,891.84. About six stocks advanced for each that fell on theNew York Stock Exchange.
“We’ve actually seen more good news than bad across abroad spectrum of economic data,” said Art Hogan, the chiefmarket analyst at New York-based Jefferies & Co. “We look atthe initial jobless claims as another piece of economic datawe’re pretty happy with,” he said. “The most important thing isthe non-farm productivity number.
Nine of 10 industry groups in the S&P 500 advanced as thedecrease in unemployment claims signaled that job losses areslowing as the economy begins to recover. The Labor Department’smeasure of worker output jumped at a 9.5 percent annual rate,topping the highest estimate of economists surveyed byBloomberg, as labor costs fell 5.2 percent to cap the biggest12-month decrease since records began in 1948.
Tomorrow’s Jobs Report
The jobless claims data helped ease concern that risingunemployment will stifle the economy’s rebound. The governmentis projected to report that payrolls fell by 175,000 workerslast month, according to the median of estimates in a BloombergNews survey before tomorrow’s Labor Department report. Thejobless rate probably climbed to 9.9 percent, the highest since1983, according to the survey.
The S&P 500 has surged 56 percent from a 12-year low inMarch after $11.6 trillion in government spending, lending andguarantees returned the economy to growth following fourstraight quarters of contraction. The index is trading at morethan 21 times earnings, according to weekly data compiled byBloomberg. That’s near the highest level since July 2002.
Cisco added 2.6 percent to $23.90. The company’s net incomefell 19 percent to $1.79 billion, or 30 cents a share, in thefirst quarter, which ended Oct. 24. Excluding stock compensationand some other costs, profit was 36 cents, beating the 31-centaverage estimate in a survey of analysts.
‘Very Optimistic’
Cisco Chairman and Chief Executive Officer John Chambers,one of the first technology leaders to herald the recession twoyears ago, said he now sees a global economic recovery, fuelinga rebound in his company’s sales this quarter.
“Cisco is talking about a recovery around the world,Chambers is being very optimistic and people listen to him,”said William Dwyer, chief investment officer at Baltimore-basedMTB Investment Advisors, which oversees $13 billion. “Peopleare a little cautious, they like what they’re seeing, butthere’s an awful lot built into the market.”
Earnings have exceeded the average analyst estimate at 81percent of S&P 500 companies that have reported third-quarterresults so far, according to data compiled by Bloomberg. Thatwould mark the highest full-quarter proportion in data goingback to 1993.
Research In Motion, Whole Foods
Research In Motion, the maker of the BlackBerry phone,added 3.1 percent to $59.37.
Whole Foods Market Inc. slid 9.6 percent to $28.99. Thenatural-food grocer forecast full-year earnings of as little as$1.05 a share, trailing the average estimate of $1.11 fromanalysts in a Bloomberg survey.
U.S. stocks yesterday erased most of a 156-point rally inthe Dow average after a House bill to curb credit-card ratesspurred concern about bank earnings, outweighing the FederalReserve’s plan to keep interest rates at a record low.
The Bank of England slowed the pace of bond purchases assigns of an economic recovery give policy makers scope to winddown their money-printing program next year. The EuropeanCentral Bank may signal it’s moving closer to withdrawingemergency stimulus measures after leaving its benchmark interestrate at a record low today.
For Related News and Information:
To contact the reporter on this story:Sapna Maheshwari in New York at smaheshwar11@bloomberg.net.
Last Updated: November 5, 2009 09:38 ESTSource: Bloomberg
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