Hints of Strength Overseas Let Stocks Advance for Second Straight Week
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U.S. stocks posted the first back-to-back weekly gains since February after earnings at Boeing and Philip Morris International bolstered speculation that overseas growth will offset slower domestic demand.
Boeing rose the most in the Dow Jones industrial average. Philip Morris International, the cigarette maker spun off from Altria Group last month, topped profit estimates by 15 percent. Among 263 companies in the Standard & Poor's 500-stock index that have reported first-quarter results so far, 73 percent beat or matched the average estimate of analysts surveyed by Bloomberg.
"The market was too pessimistic," said Mark Freeman, asset manager at Westwood Holdings Group in Dallas. Beyond financial institutions and firms reliant on discretionary spending by consumers, "you still see companies executing, doing well, coming in better than expectations."
The S&P 500 rose 0.5 percent to a three-month high of 1397.84 last week, paring its 2008 decline to 4.8 percent. The Dow average added 0.3 percent to 12,891.86. The Russell 2000 index of small-cap companies climbed 0.1 percent to 721.88.
Safeco, which agreed to a $6.2 billion takeover by Liberty Mutual Group, surged 42 percent to $66.10, for the biggest advance in the S&P 500.
The market's gain was limited after National City Corp. sold a stake at a 40 percent discount to replenish capital depleted by mortgage losses and Ambac Financial Group took $3.1 billion in charges for subprime-related securities.
Earnings outside the financial industry have climbed 11 percent for companies in the S&P 500. Including banks, brokerages and other financials, profits have 19 fallen percent.
Yields on Treasury securities climbed for a second straight week as traders pared bets on more interest-rate cuts by the Federal Reserve. The benchmark 10-year note's yield climbed to 3.87 percent, the highest since Feb. 25, from 3.71 percent. Odds that the central bank on Wednesday will cut its target rate for overnight loans between banks by a quarter-point fell to 78 percent, from 98 percent.
The Treasury will auction $20 billion of three-month bills and $20 billion of six-month bills tomorrow. They yielded 1.45 percent and 1.74 percent, respectively, in when-issued trading. One-month bills will be sold Tuesday.
-- Bloomberg News
