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S&P 500 edges higher, helped by gold miners
July 22, 2013, 05:00 AM The Associated Press

NEW YORK — Rising commodity prices made up for a disappointing quarterly performance at McDonalds, lifting the stock market Monday.

Higher gold and copper prices boosted the stocks of mining companies in early afternoon trading. That helped offset lackluster results from a handful of large U.S. companies. McDonald's stock fell after it reported a weak second-quarter and warned of a tough year ahead. Media company Gannett dropped after its revenues fell short of financial analysts' expectations.

Investors are looking ahead to a busy week of corporate earnings. More than 150 companies in the Standard & Poor's 500 stock index are reporting second-quarter results over the next four days.

For the most part, corporations have reported earnings that have beaten analysts' low expectations, though there have been some big letdowns. On Friday, Microsoft plunged after the software giant wrote off nearly $1 billion on its new tablet computer and reported declining revenue. Coca-Cola slumped last Tuesday after the company said it sold less soda in North America.

"Earnings are not stellar," said Brad Reynolds, chief investment officer at investment adviser LJPR. "It just seems that the market is ok with that."

Investors were more than OK with gold's price Monday. Mining stocks rose after the price of gold climbed above $1,300 for first time in a month.

Investors dumped gold earlier in the year because they thought the Federal Reserve was close to ending its economic stimulus. Gold is now advancing because investors believe that the Fed could continue the stimulus for longer than previously thought. That increases the chance of rising inflation and weakens the dollar. When the dollar falls, gold becomes more attractive as an alternative investment.

Gold gained $39.80, or 3 percent, to $1,332.20 an ounce, its biggest gain since June last year.

Newmont Mining rose $1.71, or 6 percent, to $30.40 at 2:43 p.m. Eastern Daylight Time. Freeport-McMoran Copper & Gold gained 74 cents, or 2.6 percent, to $29.30.

The Standard & Poor's 500 index rose three points, or 0.2 percent, to 1,695. The index is at an all-time high.

The Dow Jones industrial average was flat at 15,543. McDonald's slump weighed on the index.

The Nasdaq composite climbed 13 points, or 0.4 percent, to 3,600.

One sector that struggled was homebuilders. Sales of previously occupied homes slipped in June to an annual rate of 5.08 million, the National Association of Realtors said Monday.

As a result, Pulte Group fell 28 cents, or 1.4 percent, to $19.08. Lennar fell 80 cents, or 2.3 percent to $34.73.

Still, the stock market has surged in July after Fed Chairman Ben Bernanke assured investors that the U.S. central bank would not pull back on its stimulus before the economy was strong enough. The Fed is buying $85 billion of bonds to keep long-term interest rates low and to encourage spending.

The S&P 500 has gained 5.6 percent in July. That puts the index on track for it best month since October 2011.

Small company stocks have fared even better. The Russell 2000 closed above 1,000 for the first time July 5 and is up 7.8 percent for the month. That signals that investors have become more comfortable buying riskier assets.

In commodities trading, the price of oil fell 80 cents, or 0.73 percent, to $107.07 a barrel.

In government bond trading, the yield on the 10-year Treasury note edged up to 2.49 percent, from 2.48 percent on Friday. As recently as July 5, the yield was as high as 2.74 percent.

As of Monday, 63 percent of the companies that have reported earnings have exceeded expectations. That's above the historical average.

S&P 500 companies are forecast to report earnings growth of 3.6 percent for the second quarter compared with a year earlier, according to data from S&P Capital IQ.

Analysts expect earnings growth to climb to 5.63 percent in the third quarter and 11.12 percent in the fourth quarter.

Those forecasts may prove optimistic if economic growth doesn't accelerate in the second half of the year, said Michael Sheldon, chief market strategist at RDM Financial.

"I'm a little suspect that we're going to see double digit (earnings) growth," said Sheldon. "We're more likely in a period of moderate to sluggish growth."

Among other stocks making big moves.

— Hasbro Inc.'s stock rose $1.45, or 3.2 percent, to $46.84. The nation's second biggest toy maker said Monday that it is expanding its merchandising relationship with The Walt Disney Co. for properties including Marvel and Star Wars.

— Yahoo fell $1.11, or 3.8 percent, to $28. The company said Monday that activist investor Dan Loeb and two other directors nominated by his hedge fund, Third Point LLC, are leaving Yahoo's board after big gains in the company's stock price the past year.

— Kimberly-Clark, which makes consumer products such as Kleenex tissue and Huggies diapers, fell $1.69, or 1.7 percent, to $97.80. The company Monday reported revenue that fell short of financial analyst's expectations.

 

 

Tags: percent, monday, after, earnings, stock, investors,


Other stories from today:

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Man killed trying to help I-280 crash victims ID'd as Redwood City resident
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