U.S. stocks rose, after the biggest weekly drop of the year for the Standard & Poor’s 500 Index, as investors awaited Alcoa Inc.’s financial release to mark the beginning of the earnings season.
Alcoa, the largest U.S. aluminum producer, added 1%. Advanced Micro Devices Inc. rose the most in the S&P 500 after Microsoft Corp. was said to use AMD chips in its next Xbox game console. BioCryst Pharmaceuticals Inc. surged 15% as China expedited the approval of its anti-influenza drug Peramivir. Lufkin Industries Inc. jumped 37% as General Electric Co. agreed to buy the maker of oil-well pumps.
The S&P 500 rose 0.4% to 1,558.85 at 3:15 p.m. in New York, after falling as much as 0.3% earlier. The Dow Jones Industrial Average added 11.41 points, or 0.1%, to 14,576.66 Trading in the S&P 500 was 16% below the 30-day average during this time of day.
Today’s reversal “continued a pattern, which has shown for quite some time now, which is any weakness is met with buying at some point of the day,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.5 billion in assets, said in a telephone interview. “There are people who are afraid of missing out on further rallies.”
The S&P 500 fell 1% last week as U.S. payrolls had the smallest gain in nine months in March while other reports showed manufacturing and services industries expanded less than forecast. The index climbed to an all-time high of 1,570.25 on April 2. The benchmark has more than doubled from its 12-year low in March 2009, helped by the Federal Reserve’s unprecedented bond purchases and three straight years of profit growth.
JPMorgan Chase & Co., Wells Fargo & Co. and Bed Bath & Beyond Inc. are among nine S&P 500 companies scheduled to report earnings this week. Analysts project profits at S&P 500 companies fell 1.8% in the latest quarter, the first year-over-year drop since 2009, estimates compiled by Bloomberg show. Analysts had predicted a 1.2% increase when surveyed in January.
Chief executive officers “have given lower and lower expectations, that anybody who doesn’t meet expectations in this quarter is going to be punished severely,” Joe Kinahan, chief derivatives strategist at Omaha, Nebraska-based TD Ameritrade Holding Corp., said by telephone. His firm has $499.3 billion in client assets. “While those that beat won’t necessarily be rewarded, it’ll keep their stocks from being annihilated.”