Stocks rise amid earnings reports, optimism over Europe

April 20 (Bloomberg) -- U.S. stocks rose, snapping a two- day decline for the Standard & Poor’s 500 Index, as profits from companies including Microsoft Corp. and General Electric Co. beat estimates and German business confidence improved.

Microsoft, the world’s largest software maker, jumped 4.2% while GE added 1.6 percent. Schlumberger Ltd. rallied 5.8% after its first-quarter profit beat projections. SanDisk Corp. lost 14% after forecasting sales that were less than some analysts estimated.

The S&P 500 gained 0.4% to 1,381.88 at 9:46 a.m. New York time, after dropping 1% over the past two days. The Dow Jones Industrial Average rose 70.16 points, or 0.5%, to 13,034.26 today.

“On the back of some weaker recent economic data, the earnings story continues to showcase that companies can ring out some profits here,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “With the constant noise in the background of Europe we seem to be focusing more on the domestic story, at least today. That just gives more credence to the fact that the recovery continues to be in place.”

Profits for the 94 companies in the S&P 500 that have reported results so far are beating estimates by 8.5%, according to data compiled by Bloomberg. The benchmark gauge for U.S. equities has risen 10% in 2012, even after the index lost 0.6% yesterday as home sales fell last month and jobless claims were more than forecast last week.

German Confidence

A report today showed German business confidence unexpectedly increased for a sixth month in April, adding to evidence that Europe’s largest economy can weather the sovereign-debt crisis.

The Group of 20 will announce new funding for the International Monetary Fund’s European reserves that will “satisfy” requests from Managing Director Christine Lagarde, Russian Deputy Finance Minister Sergei Storchak said. Lagarde, who has called Europe the “epicenter” of risks to the world economy, is seeking more than $400 billion in new funding from member countries.

Microsoft rose 4.2% to $32.30. The Redmond, Washington-based company reported net income of 60 cents a share, exceeding the 57-cent average estimate of analysts surveyed by Bloomberg amid better-than-expected sales of Windows and Office software for businesses.

General Electric Co. rose 1.6% to $19.45. The maker of aircraft engines and provider of financial services beat analysts’ earnings estimates as profit gains at its energy business, its largest industrial division, outpaced finance for the first time in two years.

Drilling Rigs

Schlumberger, the world’s largest oilfield-services provider, gained 5.8% to $73.85. The world’s largest oilfield-services provider said first-quarter profit rose 38% as the number of U.S. rigs drilling for oil reached a record.

Advanced Micro Devices Inc. climbed 1.1% to $8.06. The second-largest maker of processors for personal computers said second-quarter sales will grow about 3% from the first three months. That indicates revenue of about $1.63 billion, compared with the $1.59 billion average analyst estimate compiled by Bloomberg.

Honeywell International Inc., the maker of digital flight controls and work boots, rallied 4% to $60.33 after the company posted a first-quarter profit that beat analysts’ estimates and boosted its full-year forecast.

McDonald’s Corp. added 2% to $97.15. The world’s largest restaurant chain reported a 4.8% gain in first- quarter profit as new menu items such as Chicken McBites attracted U.S. consumers.

SanDisk, which makes memory chips used in mobile devices, declined 14% to $35 after giving a second-quarter sales forecast that fell short of some analysts’ estimates. Chip production at SanDisk and its rivals is outpacing demand, causing prices to fall, Chief Executive Officer Sanjay Mehrotra said on a conference call with analysts yesterday. Some of the company’s customers also ordered fewer chips for mobile phones than SanDisk had predicted, he said.

Bloomberg News

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