U.S. Stocks Extend 14% Rally; Google Revenues Surge 33%

Nichole Harper
14 Oct, 2011
New York City

U.S. stocks extended gains and the recent rally in place since October 4 lifted the S&P 500 index by 14%. The index is still caught in a narrow trading range. Google earnings and revenue growth exceeded 30% and J.B. Hunt Transport Services quarterly net increased 6%.

[R]1:15 PM New York – U.S. stocks extended gains and the recent rally in place since October 4 lifted the S&P 500 index by 14%. The index is still caught in a narrow trading range. Google earnings and revenue growth exceeded 30% and J.B. Hunt Transport Services quarterly net increased 6%.[/R]

U.S. stocks gained after retail sales were ahead of expectations in September and the euro zone leaders huddled to finalize the bank recapitalization plan. The preliminary confidence index declined.

Retail sales increased 1.1% in September from August and surged 7.9% from a year ago and sales were revised to 0.3% growth in August from July.

The sales increase was the fastest since February and total retail sales in the month were $395.5 billion, according to the data released by the Commerce Department.

The strength in the sales surprised most economists and also highlighted the strength in the economy as every category of the retailer showed an increase in sales expects electronics and appliance stores.

Auto sales increased 3.6% from August and soared 8.5% from a year ago but electronics and consumer durables sales were flat.

In a separate report consumer confidence index declined to 57.7 in October from 59.4 in September, according to a preliminary report by Reuters/University of Michigan. The decline in the index surprised most economists.

The S&P 500 index declined 1% after rising 4.5% in the last three days but the index is stuck in a trading range between 1,100 and 1,200 in the last eight weeks.

Across the Atlantic, European leaders are slowly corralling a consensus to ask banks take more than 21% loss in the Greek bonds and banks are required to recapitalize as early as next month.

The meeting of G20 finance chiefs and central bankers in Paris today also shot down the proposal to increase the IMF capital after U.S. Treasury Secretary Timothy F. Geithner rejected the plan and said IMF “have substantial resources that are uncommitted.”

Separately, a rating agency S&P lowered credit rating of Spain by a notch and cited weakening economic conditions and stalled labor reforms. Spain’s rating was lowered third time in three years.

The rating action follows a downgrade a week by Fitch and two months after Moody’s placed the country’s debt on a watch list with a negative outlook.

Italian markets soared after Prime Minister Silvio Berlusconi won the vote of confidence by 316 to 301. The today’s vote takes Berlusconi off the hook and allows the government to proceed routine budgetary measures but internal dissent in the governing coalition is growing.

Stock Movers

Google Inc. ((GOOG)) advanced 5.8% or $32.85 to $591.60 after the Internet search engine operator reported third quarter revenues soared 33% to $9.72 billion from $7.29 billion in the same quarter last year. Net income in the quarter increased to $2.73 billion or $8.33 per diluted share compared to $2.17 billion or $6.72 per share a year ago.

J.B. Hunt Transport Services, Inc. ((JBHT)) increased 7% or $2.73 to $41.62 after the transportation service provider reported third quarter revenues grew to $1,171.3 million from $986.0 million in the same quarter last year. Net income in the quarter increased 5.9% to $68.6 million or 57 cents per diluted share compared to $52.2 million or 41 cents per share a year ago earlier.

Mattel, Inc. ((MAT)) decreased 2.2% or 61 cents to $27.17 after the toy products maker stated third quarter net sales increased 9% to $2.0 billion from $1.83 billion in the same quarter last year. Net income in the quarter increased to $300.8 million or 86 cents per diluted share compared to $283.3 million or 77 cents per share a year ago period.

Microchip Technology Inc ((MCHP)) slipped 4.9% or $1.73 to $33.56 after the programmable memory maker expects net sales for second quarter may decline 9.1% sequentially and to $340.6 million compared to earlier estimate between $352 and $370.8. Earnings per share are expected to be approximately 38 cents and 40 cents compared to the previous estimate between 44 cents and 48 cents.

The Gap Inc. ((GPS)) fell 0.9% or 17 cents to $17.75 after the specialty retailer said it will shutter at least 21% of its GAP branded stores in the U.S. and reaffirmed its goal of growing total sales outside North America and online by about 30% by the end of fiscal 2013.