Caterpillar's earnings data lifts blue chip stocks

Dow Jones: 12,810.54 (+47.23) S&P 500: 1,363.61 (+3.13) Nasdaq: 2,873.54 (+1.01)US STOCKS gained yesterday, extending a weekly rally in the Standard and Poor's 500 Index, as Caterpillar, Goodyear Tire and Rubber reported earnings that topped analysts' estimates.

Caterpillar jumped 2.5 per cent after also raising its forecast amid a surge in sales in developing countries and Goodyear surged 12 per cent after posting record sales. Microsoft lost 3 per cent after sales missed analysts’ predictions. Research In Motion, the maker of the BlackBerry, tumbled 14 per cent after cutting its earnings forecast.

The Dow Jones industrial average gained 47.23 points, or 0.37 per cent, to 12,810.54.

The Standard & Poor’s 500 Index rose 3.13 points, or 0.23 per cent, to 1,363.61.

The Nasdaq Composite Index edged up 1.01 points, or 0.04 per cent, to 2,873.54.

“The earnings reports have been as expected or slightly better,” said Michael Shinnick, a South Bend, Indiana-based money manager at Wasatch Advisors.

“Companies like Caterpillar with exposure to global growth were very strong. However, there are some pockets of softness with debate over future strength as we saw with Microsoft,” he said.

Shares of Merck rose 0.45 per cent to $35.95 while Chevron added 0.6 per cent to $109.44. Both stocks are Dow components.

The S&P 500 rose 2 per cent so far this week and is set to gain 2.9 per cent this month. The measure has rallied 8.4 per cent in 2011 as higher than estimated profit and economic reports from manufacturing to housing bolstered investors’ confidence.

“First-quarter results have been impressive and are a reminder that SP 500 earnings per share results can remain resilient despite weaker US gross domestic product growth,” Thomas J Lee, JPMorgan’s chief US equity strategist, wrote yesterday.

“The most encouraging aspect of first-quarter earnings has been the strength in top-line growth,” he said.

Sales have grown 10 per cent for S&P 500 companies that have reported quarterly results since April 11th, exceeding analysts’ estimates at 71 per cent of the companies. Government data showed consumer spending in the US rose in March as Americans spent more on food and fuel. – (Bloomberg/Reuters)