By Donna Kardos Yesalavich
U.S. stocks climbed towards weekly gains on Friday, with the energy sector lifted by upbeat earnings forecast from Chevron and a bigger-than-expected increase in wholesale inventories.
The Dow Jones Industrial Average (DJI) was up 36 points, or 0.3%, at 10,963 recently, moving closer to the 11,000 level for the third time this week.
The Nasdaq Composite (RIXF) climbed 0.4%. The Standard & Poor's 500 index (SPX) advanced 0.3%, with the energy sector leading its gains.
On the Dow, Walt Disney & Co. (DIS) was the measure's best performer, up 1.7%. Chevron Corp. (CVX) was also strong, up 2.2%, after the oil giant said it expects first-quarter profit to be higher than the previous quarter, driven by higher earnings from its production and exploration operations, which are benefiting from higher commodity prices. Exxon Mobil Corp. (CVX) shares climbed, up 2.2%.
Chevron's announcement, combined with strong sales results posted by retailers on Thursday, helped boost expectations for the earnings reporting season, which unofficially kicks off Monday with a report from Alcoa.
However, Alcoa Inc. (AA) was the Dow's weakest component, down 4%, after J.P. Morgan Chase cut its investment rating on the stock to "neutral" from "overweight." The firm cited lower earnings expectations based on a lower aluminum price forecast.
Boosting sentiment, the Commerce Department said U.S. wholesalers' inventories rose 0.6% in February, topping economists' expectations. Sales of U.S. wholesalers were up 0.8% to a seasonally adjusted $338.66 billion. It was the eleventh straight monthly increase in sales. Wall Street analysts had expected inventories to rise by 0.3% in February.
But an even bigger focus for the market are the upcoming first-quarter earnings reports. Investors will be looking to the results to help justify stocks' climb to 18-month highs. "Corporate earnings will be key," said Bill Quinn, chairman of American Beacon Advisors.
"I think corporate earnings will be pretty good," he added, noting revenues have been improving and with companies still keeping down costs, margins and earnings should also come in strong.
Still, Quinn said, "I don't think it's any indication that things are going to take off in any significant manner." He cited concerns over interest rates and still-high unemployment.
The dollar weakened against the euro as concerns over Greece's debt troubles eased. Medley Global Advisors stated in a report to clients that European Union officials have agreed on terms for funding a backstop deal for Greece. The report from New York-based think-tank said funding to be provided to Greece will have interest rates "well below those prevailing in the market." EU officials could not be immediately reached for comments on the Medley Advisors report.
However, Fitch Ratings cut its issuer default ratings on Greece to BBB-, the lowest investment-grade rating, citing "the intensification of fiscal challenges in response to more adverse prospects for economic growth and increased interest costs." The ratings agency also noted ongoing uncertainties about the government's financing strategy.
The dollar was also weaker against the yen and the U.S. Dollar Index (DXY) - representing the U.S. currency against the basket of six other currencies - fell 0.6%.
Treasurys declined, pushing 10-year notes (UST10Y) to a yield of 3.87%. Crude-oil futures slipped below $84.41 a barrel, while gold futures settled at afresh four month highs.
Among stocks in focus, Constellation Brands (STZ) fell 3.3%. The wine maker's fiscal fourth-quarter sales dropped, and its forecast for earnings in the new fiscal year missed analysts' views.
Massey Energy Co. (MEE) climbed 1.5%, after the coal mining company said it will increase production at its other coal mines, although it won't be able to fully replace planned output from the West Virginia mine shut down by a fatal explosion this week, according to a federal filing. The stock is still down 11% for the week.