US stocks rose, breaking a two-week slump, as industries considered the safest investments led gains after reports on home sales and jobless claims tempered optimism about the economy, while earnings lifted companies from Travelers Cos to General Electric Co (GE).
Gauges for utilities, consumer staples, healthcare and phone stocks climbed the most among 10 groups in the Standard & Poor’s 500 Index, jumping at least 1.5 percent. Travelers and GE added more than 2.5 percent after their profit beat analysts’ estimates. Technology companies were the only group to retreat, falling for a second week. The industry was dragged down by declines of 5.3 percent by Apple Inc and 1.6 percent by IBM Corp, offsetting Microsoft Corp’s 5.2 percent rally on better-than-estimated results.
The S&P 500 rose 0.6 percent to 1,378.53 for the first weekly advance since March 30. The Dow Jones Industrial Average added 179.67 points, or 1.4 percent, to 13,029.26.
“It’s just a small rotation as some investors reduced the amount of risk in their portfolio, maybe trying to reposition in anticipation of a correction,” Robert Pavlik, chief market strategist at Banyan Partners LLC in New York, said in a phone interview. “We’ve got some decent earnings, but people are still a little bit nervous that we may not see that continued follow-through with earnings expansion.”
The week’s gain extended the benchmark index’s rise this year to 9.6 percent as investors bought stocks this year amid better-than-estimated economic and corporate earnings. S&P 500 companies are on pace to beat analysts’ profit estimates for a 13th straight quarter. Of the 94 firms that have reported results since April 10, 85 percent have topped expectations, according to data compiled by Bloomberg.
Analysts raised their first-quarter earnings estimates this week, projecting per-share profits grew 3.3 percent, up from last week’s 1.7 percent estimate. Earnings will grow 8.8 percent for the full year, according to the data.
“We are bullish,” Thomas Sowanick, chief investment officer of Omnivest Group LLC, said in a telephone interview. “We have powerful earnings. If you look at the underlying trends of the economy, things are not as fast as they were, but they are not falling apart.”
The S&P 500 jumped the most in a month on Tuesday after the IMF raised its global growth projection for this year to 3.5 percent. Stocks retreated on Thursday as US Labor Department figures showed initial jobless claims fall by 2,000 to 386,000 in the week ended April 14, far short of the 375,000 expected by analysts, raising concerns over the recovery of the country’s beleaguered labor market.
Existing home sales also fell by 2.6 percent last month from February, the US National Association of Realtors said.