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U.S. Stocks Rise on German Business Confidence, Earnings Reports

Feb. 22 (Bloomberg) -- U.S. stocks rose, paring a weekly decline in the Standard & Poor’s 500 Index, as German business confidence jumped to a 10-month high amid better-than- anticipated corporate earnings.

Hewlett-Packard Co. advanced 11 percent, the most in the S&P 500, after it forecast profit that exceeded analysts’ estimates. American International Group Inc. climbed 3.8 percent as fourth-quarter results beat forecasts. Texas Instruments Inc. rose 4.4 percent after increasing its quarterly dividend and adding $5 billion to its stock repurchase program.

The S&P 500 rose 0.4 percent to 1,508.41 at 10:45 a.m. in New York. The index fell 1.9 percent in the previous two days as concern grew that the Federal Reserve may slow the pace of stimulus. The Dow Jones Industrial Average added 57.37 points, or 0.4 percent, to 13,937.99 today. Trading in S&P 500 companies was 4.8 percent below the 30-day average at this time of day.

“The tone generally is not ebullient, but it tells you that there’s a real strength in the equity market that it’s actually rebounding today,” Jeffrey Davis, chief investment officer at Boston-based Lee Munder Capital Group LLC, said in a phone interview. His firm oversees $5 billion. “I haven’t seen a market like this in a long time where you can absorb a week of not-so-good news and rally at the end.”

In Germany, the Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 107.4 in February from a revised 104.3 in January. The median of 38 forecasts in a Bloomberg News survey had called for an increase to 104.9. The latest reading was the highest since April.

Italian Elections

In Italy, voters head for general elections on Sunday amid concern the emergence of a populist government will derail the nation’s austerity program.

The S&P 500 has gained 5.7 percent this year as U.S. lawmakers agreed on a compromise budget and companies reported better-than-estimated earnings. About 73 percent of the companies in the S&P 500 that have released quarterly results have exceeded profit estimates, and 64 percent beat sales estimates, data compiled by Bloomberg show.

The benchmark index is heading for its first weekly drop of the year. Equities slid as Fed minutes showed several participants at the Federal Open Market Committee’s latest meeting said the central bank should be ready to vary the pace of its $85 billion in monthly bond purchases, spurring concern stimulus will be curtailed.

“A lot of people have been looking for pullbacks in the market to put money at work in equities,” said Brian Amidei, a Palm Desert, California-based managing director at HighTower Advisors. His firm manages about $25 billion. “The market got a lift from fourth-quarter earnings. It will do well this year but we will have some volatility in between as we’re starting to see now.”


Hewlett-Packard gained $1.87 to $18.97. The largest personal-computer maker forecast fiscal second-quarter profit that exceeded analysts’ estimates, helped by cost-cutting measures and a smaller-than-projected drop in service sales.

Profit, excluding some items, will be 80 cents to 82 cents a share for the current quarter, which ends in April, the Palo Alto, California-based company said. That beat the 77-cent average estimate of analysts, according to data compiled by Bloomberg.

AIG advanced $1.41 to $38.69. The insurer that repaid a U.S. bailout gained as fourth-quarter results beat analysts’ estimates after investments drove a surprise operating profit.

Hurricane Sandy

Operating profit was 20 cents a share, beating the average forecast for a loss of 8 cents in a Bloomberg survey of 17 analysts. The net loss was $3.96 billion, driven by claims from Hurricane Sandy and costs tied to a deal to sell the plane- leasing unit, New York-based AIG said yesterday in a statement.

Texas Instruments rose $1.42 to $33.90. The largest maker of analog chips increased its quarterly dividend by 33 percent and said it added $5 billion to its stock repurchase program.

Nordson Corp. slid 6.6 percent to $62.29. The Ohio-based maker of machines that apply adhesives to consumer and industrial products said it expects second-quarter earnings-per- share of between 78 cents and 87 cents, compared with estimates of 93 cents.

Abercrombie & Fitch Co. tumbled 7.8 percent, the most in the S&P 500, to $45.21. The teen retailer with more than 800 namesake and Hollister Co. stores forecast a loss for the first quarter, citing concern about the weak economy’s impact on sales.

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