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Stocks gain amid improving factory data

By Nick Taborek and Aubrey Pringle
Bloomberg News

NEW YORK: Stocks rose on the first trading day of November, halting the first two-day drop in the Standard & Poor’s 500 index in three weeks.

First Solar Inc. rallied 18 percent after the largest U.S. solar-panel manufacturer said third-quarter profit almost doubled. American International Group Inc. lost 6.5 percent after premium revenue fell at its property-casualty division. Chevron Corp. slid 1.6 percent as it reported profit below estimates as weaker refining margins eroded gains from higher commodity prices and output from wells.

The S&P 500 climbed 0.3 percent to 1,761.64 after earlier falling as much as 0.2 percent. The equity gauge advanced 0.1 percent in the past five days, its fourth straight weekly gain. The Dow Jones industrial average rose 69.80 points, or 0.5 percent, to 15,615.55.

“Earnings drive the market, and earnings have been good,” said Richard Sichel, the chief investment officer at Philadelphia Trust Co., where he helps oversee $1.9 billion. “Economic growth is slow but going in the right direction. Stocks definitely have shown that they’re the best place to be, and that can continue in spite of things going on in Washington.”

Better-than-forecast corporate results and Fed stimulus have helped the S&P 500 rally 24 percent this year as it challenges 2009 for the best annual gain in the past decade. The gauge jumped 4.5 percent in October for the biggest advance in three months and closed at a record Oct. 29.

Of the 368 S&P 500 companies that have reported results for the third quarter, 75 percent exceeded analysts’ predictions for profit, while 53 percent beat sales estimates, data by Bloomberg showed. Profits for members of the gauge probably increased 4.1 percent in the period as sales climbed 2.9 percent, according to analysts’ estimates compiled by Bloomberg.

Investors continued to shift money into stocks last month, as U.S. equity exchange-traded funds drew $18.2 billion in October, the most in three months and the third-highest amount since 2010, according to Bloomberg data. About $110.6 billion has been absorbed this year, putting the stock ETFs on pace for the highest flows since the records began in 2000.

Equities turned lower early Friday after improving manufacturing data raised concern that the Federal Reserve will cut its $85 billion in monthly bond buying sooner than expected.

The economy will probably expand at a 2 percent annualized rate in the final three months of the year, less than economists projected at the start of the federal government shutdown. The median projection of 71 economists surveyed by Bloomberg yesterday compares with a 2.4 percent forecast in an Oct. 4-9 survey.

Seven out of 10 main industries in the S&P 500 advanced as industrial stocks and utilities rose at least 0.7 percent to pace gains. Boeing jumped 1.9 percent to a record $133.03 for the biggest gain in the Dow.

J.C. Penney advanced 8.5 percent to $8.14, a one-month high. ITG Investment Research analyst John Tomlinson boosted his third-quarter revenue estimate, citing “improved sales trends.” Netflix rose 2.1 percent to $329.27. The online video-streaming service was upgraded to outperform from neutral at Robert Baird & Co.


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