By Dan Strumpf
U.S. stocks climbed, with major benchmarks nearing record highs,
buoyed by a truce deal in Ukraine and strong quarterly earnings
reports.
The S&P 500 index gained 19.95 points, or 1%, to 2088.48,
putting it within striking distance of its record close of 2090.57
reached in late December.
The Dow Jones Industrial Average advanced 110.24 points, or
0.6%, to 17972.38--about 0.5% short of its 18053.71 record
finish.
The Nasdaq Composite Index gained 56.43 points, or 1.2%, to
4857.61, its highest closing level since March 2000.
Stocks rallied at the open, riding on the heels of gains in
Europe after French and German leaders brokered a deal to end
Ukraine's conflict with Russia-backed separatists. Germany's DAX
index finished at its 11th record close of the year after rising
1.6%, while the Stoxx Europe 600 index added 0.75%. Meanwhile,
eurozone finance ministers vowed to continue negotiations after
six-hour talks failed to find a way to resolve Greece's financial
issues.
The news helped ease concerns over the political and economic
fortunes of Europe, which have buffeted stocks in recent weeks.
"The market really has changed its stripes in a positive way on
its view of Europe," said Joe Spinelli, who heads single-stock
trading in the Americas for Deutsche Bank. "It definitely helps
from a sentiment perspective that you've got some resolution over
in Ukraine."
Strong earnings also gave stocks a lift. Shares of Dow component
Cisco Systems Inc. soared 9.4%, contributing 16 points to the
blue-chip index. The company reported higher revenue and net income
and boosted its dividend.
Shares of TripAdvisor Inc. soared 22% after the company's
fourth-quarter profit soared on stronger-than-expected revenue.
McGraw Hill Financial Inc. jumped 4.1% after reporting adjusted
earnings that exceeded expectations.
Investors have been encouraged by a recent string of positive
quarterly earnings reports. In early January, analysts had expected
fourth-quarter profits to rise just 1.1% for S&P 500 companies,
marking the slowest pace of earnings growth since the third quarter
of 2012, according to FactSet.
But those forecasts have so far proven too dire. While
contracting profits in the energy and financial sectors have curbed
earnings gains overall, double-digit growth in the health-care,
industrial and telecommunications sectors have cushioned the blow.
About three-fourths of S&P 500 companies have reported
fourth-quarter earnings, and profits are now on track to rise 3.9%,
according to FactSet. A big contributor was the 38% rise in
quarterly profits by Apple Inc., the largest company by market
capitalization.
"All in all, given where we were three weeks ago, things are
substantially better," said Jeff Yu, head of single stock
derivatives trading at UBS. "The flows we're seeing definitely are
more constructive. People are buying stocks. People are
reinvesting."
Mr. Spinelli, of Deutsche Bank, said he has noticed a more
bullish tilt among investor clients, encouraged in part by
improving U.S. economic data. He said a number of investors have
lately been shifting out of more defensive pockets of the market,
such as utilities, and into riskier areas like technology
stocks.
S&P 500 utilities stocks fell 0.5% on Thursday and have shed
5.5% so far in February. The S&P 500's information technology
sector, meanwhile, advanced 1.6% Thursday and 6.1% for the
month.
"On an overall basis, I still think we're in a bull market,"
said Martin Sass, head of the $7.5-billion money manager M.D. Sass.
"I don't see the forces that tend to end bull markets--namely no
recession on the horizon, no meaningful increase in bond yields,
and little inflation. So it's a good environment overall."
Mr. Sass said the recent volatility has presented buying
opportunities, though he has been avoiding energy stocks until oil
prices find an equilibrium.
In deal news, Expedia Inc. agreed to buy Orbitz Worldwide Inc.
for about $1.3 billion. Shares of Orbitz jumped 22% and those of
Expedia rose 15%.
Shares of American Express Co. fell 6.4% after the company said
its merchant agreement with Costco Wholesale Corp. will end next
year. Shares of Costco gained 0.2%.
Shares of Tesla Motors Inc. fell 4.7% after the company said its
fourth-quarter loss widened to $108 million, while deliveries of
its $71,000-and-up luxury electric cars fell short of its
forecast.
In economic news, jobless claims in the week ended Feb. 7 rose
25,000 to 304,000, the Labor Department said Thursday. Economists
surveyed by The Wall Street Journal had expected 290,000 claims.
The level of claims was consistent with solid job growth.
Retail sales fell in January for the second month in a row,
fueling worries that the drop in gasoline prices isn't translating
into more consumer spending. Sales fell 0.8% last month to $439.77
billion, the Commerce Department said. Economists polled by The
Wall Street Journal expected a 0.5% decline.
In commodity markets, crude-oil futures gained 4.9% to $51.21 a
barrel. Gold futures added 0.1% to $1220.10 an ounce. Treasury
prices rose, pushing the 10-year yield down to 1.983% from 1.987%
on Wednesday.
Saumya Vaishampayan contributed to this article.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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