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posted: 7/25/2013 4:37 PM

Materials companies help stocks to a slight gain

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  • Facebook Chief Executive Officer Mark Zuckerberg's decision last year to bet big on mobile software is paying off, with sales of ads on wireless devices now on track to surpass revenue from desktop computers.

      Facebook Chief Executive Officer Mark Zuckerberg's decision last year to bet big on mobile software is paying off, with sales of ads on wireless devices now on track to surpass revenue from desktop computers.
    ASSOCIATED PRESS

 
Associated Press

NEW YORK -- Higher earnings from energy and chemical companies nudged the stock market up Thursday.

The modest move extends a pattern seen this week: Even with plenty of earnings news from big companies, the broader market has shuffled between minor gains and minor losses.

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Cabot Oil & Gas and Range Resources reported revenue and earnings that trumped estimates, sending their stocks up 7 percent. Cabot climbed $4.85 to $76.56. Range Resources rose $5.34 to $81.39.

Facebook soared 30 percent after reporting earnings late Wednesday that easily beat analysts' forecasts thanks to higher revenue from ads on mobile devices. Facebook's stock gained $7.85 to $34.36.

Nearly halfway through the second-quarter earnings season, the overall trend looks good, but not great, said Tyler Vernon, chief investment officer of Biltmore Capital in Princeton, NJ. "There have been some big disappointments, like Caterpillar yesterday, but we're seeing better and better numbers coming out."

The Standard & Poor's 500 index gained 4.31 points, or 0.3 percent, to close at 1,690.25.

The Dow Jones industrial average rose 2.41 points, or 0.02 percent, to 15,544.65. The Dow was held back by Home Depot and Caterpillar, which warned of sagging sales on Wednesday.

The Nasdaq composite index gained 19.93 points, or 0.6 percent, to 3,599.53.

Analysts forecast that companies in the S&P 500 index will report earnings growth of 4.3 percent over the same period last year, according to S&P Capital IQ. At the start of July, the forecast was for growth of 2.8 percent. More than six out of every 10 companies have cleared analysts' earnings targets so far.

Eventually, improving profits should help push the S&P 500 index above 1,700 in the coming weeks, Vernon said.

D.R. Horton, the country's largest builder, and PulteGroup said orders for new houses jumped in the second quarter, but their results still fell short of what analysts had expected. PulteGroup also posted a 14 percent decline in profits

D.R. Horton dropped $1.82, or 9 percent, to $19.38. PulteGroup lost $2.29, or 12.4 percent, to $16.16, the biggest drop of any stock in the S&P 500.

"Housing is taking it on the chin," said JJ Kinahan, chief strategist at TD Ameritrade in Chicago. "I think what you're seeing a bit of today is people questioning what higher mortgage rates mean for housing."

In the market for U.S. government bonds, the yield on the 10-year Treasury note was unchanged from late Wednesday at 2.59 percent. Late last week, it was trading at 2.48 percent.

The 10-year yield acts as a benchmark rate for most mortgage loans. A sharp increase in the rate drives up mortgage costs and could slow down sales in the housing market.

It's still very low by historical standards thanks in large part to the Federal Reserve's massive bond-buying program. The 10-year Treasury yield hit a recent low of 1.63 percent on May 3. By contrast, it was trading around 4 percent in the summer of 2008, shortly before the worst days of the financial crisis.

The Russell 2000 index of small-company stocks set another record high, gaining 10.35 points, or 1 percent, to 1,054.18. The Russell has trounced other indexes this year, gaining 24 percent versus 19 percent for the S&P 500 and the Dow.

Among other stocks making big moves:

• Las Vegas Sands, a major casino operator, fell 57 cents, or 1 percent, to $54.38 after it posted lower revenue and income than financial analysts had expected.

• Visa rose $9.11, or 5 percent, to $195.86. Visa returned to profitability in its third fiscal quarter and reported strong revenue growth as the company processed more transactions worldwide.

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