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U.S. stocks advance as Google rally eclipses Ukraine concerns

By Anna Hirtenstein and Callie Bost

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(Bloomberg) — U.S. stocks rose, following the biggest drop since April for the Standard & Poor’s 500 Index, as a rally in Google Inc. overshadowed concerns over crises in the Ukraine and Middle East.

Google jumped 2.7 percent after it posted revenue that exceeded analysts’ estimates. IBM fell 0.4 percent after reporting that revenue dropped for a ninth quarter. Advanced Micro Devices Inc. tumbled 18 percent as it forecast sales below estimates.

The S&P 500 gained 0.4 percent to 1,964.95 at 9:51 a.m. in New York, paring its loss for the week to 0.1 percent. The Dow Jones Industrial Average climbed 46.56 points, or 0.3 percent, to 17,023.37. Trading in S&P 500 companies was 59 percent above the 30-day average for this time of day.

“There will be a greater level of uncertainty in the market today with yesterday’s events in Ukraine,” Nick Skiming, who helps manage $10 billion at Ashburton Ltd., said in a phone interview from Jersey, in the Channel Islands. “But big names such as Google will provide some fill. The U.S. is in a good place right now, with positive results from several domestically-focused companies.”

The S&P 500 fell 1.2 percent yesterday on rising concern over tension in Ukraine and the Middle East. The benchmark gauge ended a string of 62 straight days without a gain or decline of more than 1 percent.

Jet Crash

A Malaysian Airlines jet went down over eastern Ukraine, killing all 298 people on board, just a day after the U.S. and the European Union imposed further sanctions on Russia over the conflict. Russia and Ukraine blamed each other for the downing of the jet as moves to investigate the crash got under way. The United Nations Security Council will hold an emergency meeting over the incident today.

Stocks extended losses late yesterday after Israel began a ground operation in the Gaza Strip.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, rallied 32 percent yesterday, the most since April 2013, closing at 14.54, a three-month high. The VIX dropped 9.3 percent today to 13.19. Equities have rallied this year amid better-than-estimated corporate earnings and central bank stimulus as the U.S. economy shows signs of recovering from a 2.9 percent contraction in the first quarter. The S&P 500 closed at a record on July 3 while the Dow reached an all-time high on July 16.

Economic Data

A gauge of consumer sentiment probably rose this month. The Thomson Reuters/University of Michigan’s preliminary sentiment index advanced to 83, according to the median economist forecast in a Bloomberg News survey. The index climbed to 82.5 in June. The Conference Board’s index of U.S. leading indicators probably increased 0.5 percent in June, the estimates show.

About 77 percent of the 82 companies in the S&P 500 that have posted results this earnings season beat analysts’ profit projections, and 70 percent exceeded sales estimates, data compiled by Bloomberg show. Profit by the gauge’s members increased 4.5 percent in the second quarter, and revenue rose 3.1 percent, according to analysts’ estimates compiled by Bloomberg.

“We had a bit of a low expectation going into the second quarter, given the first quarter,” Jim Russell, who helps oversee $120 billion as a senior equity strategist at U.S. Bank Wealth Management in Cincinnati, said by phone. “We do feel the second quarter finished much stronger than it began. We think the economic drumbeat is growing louder and more constructive for the markets moving forward.”

Google Earnings

Google rose 2.7 percent today after reporting that revenue exceeded analysts’ estimates as it sold more advertising. Revenue excluding revenue passed on to partners was $12.7 billion in the second quarter, compared with the average projection of $12.3 billion.

General Electric Co. slipped 0.9 percent. The company said it will hold an initial public offering for the Synchrony Financial unit, its Capital’s North American consumer operations, this month. GE also said adjusted profit from continuing operations climbed 8 percent from a year earlier to $3.9 billion.

IBM lost 0.4 percent. The maker of personal computers said second-quarter sales fell 2 percent from a year earlier to $24.4 billion as demand for hardware and computer services declined. That compared with the average analyst estimate of $24.1 billion. Adjusted earnings rose to $4.32 a share, the company said.

AMD tumbled 18 percent. The chipmaker forecast third- quarter sales will rise 2 percent, plus or minus 3 percent, from the previous period, or as much as $1.51 billion. That would miss the average analyst estimate of $1.57 billion, data compiled by Bloomberg show.

AbbVie Inc. declined 0.5 percent. The drugmaker agreed to buy Shire Plc for about 32 billion pounds ($54.8 billion). Shire holders will receive cash and stock valued at 52.48 pounds a share, the companies said in a statement. That’s 53 percent above Shire’s closing price on May 2, before AbbVie made its first offer.

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