S&P 500 Extends Seventh Weekly Advance

Nichole Harper
19 Feb, 2013
New York City

U.S. stocks extended gains after the latest earnings release and widespread gains in the European markets. German investor confidence rose more than estimated. Merger talks among office supply retailers also contributed to the positive sentiment. Homebuilder confidence unexpectedly fell in February.

[R]12:30 PM New York – U.S. stocks extended gains after the latest earnings release and widespread gains in the European markets. German investor confidence rose more than estimated. Merger talks among office supply retailers also contributed to the positive sentiment. Homebuilder confidence unexpectedly fell in February. [/R]

Market indexes traded higher and extended gains of the last two weeks on the earnings optimism and merger talks between two office supplies retailers.

Office Max ((OMX)) surged 25% and Office Depot ((ODP)) gained 16% after two companies were said to be in advance talks to merge their operations and lower costs.

The news was first reported by the Wall Street Journal and confirmed by two investment bankers with direct knowledge of talks in New York.

However, previous attempt of a merger in the industry was thwarted by regulators as far back as in 1997.

Separately, home builder confidence declined in February from a six-year high in January according to the data released by the National Association of Realtors. The index declined to 46 from 47 in January and any data below 50 suggests that business conditions are poor.

Confidence among builders in the West increased to 60 from 59 and gained to 41 from 36 in the Northeast. The index held at 46 among builders in the Midwest and fell to 44 from 51 in the South.

Market indexes across the European Union traded higher after latest data on German sentiment showed a sharp increase.

The index of investor confidence in Germany increased to 48.2 in February from 31.5 in January, according to ZEW Center for European Economic Research.

Spain successfully sold 4 billion euros in short-term debt today meeting its debt sale target.

Stocks in Tokyo took a breather after rising sharply last week and the yen strengthened.

Finance minister Aso said he is not looking to buy foreign bonds to stimulate the economy a day after Prime Minister Abe Shinzo said buying international bonds remains one option.

Also, prime minister will appoint a new governor of Bank of Japan after a summit with President Barack Obama in Washington February between February 21 and 24. The summit is scheduled to focus on Japan’s entry into a regional free trade that may lead to new growth initiatives.

Stocks in Review

Cimarex Energy Co. ((XEC)) gained 1.2% or 80 cents to $65.75 after the oil and gas exploration and production maker said total revenues in the fourth quarter ending in October increased 3% to $429.8 million.

Net income in the quarter declined 15% to $99.2 million or $1.14 diluted a share compared to $116.9 million or $1.36 a share a year ago quarter.

Google ((GOOG)) gained 1.2% and crossed $800 for the first time and extended gains to 13% in the year so far. General Mills increased 1.2% after the food products company said it plans to return more cash to shareholders in fiscal 2014.

Humana ((HUM)) plunged 8% after the government agency proposed higher discount to reimburse Medicare Advantage program for elderly and disabled.

The government agency said that premium for Medicare Advantage managed by private insurance companies is expected to fall 2%.

UnitedHealth ((UNH)) declined 2.4% and Cigna ((CI)) fell 2.3%.

Medtronic, Inc. ((MDT)) dropped 3.5% or $1.67 to $45.45 after the medical equipments maker reported revenues in the third quarter ending in December grew 4% to $4.03 billion. The stock eased on lower than expected sales.

Net earnings in the quarter climbed 6% to $988 million or 97 cents a diluted share compared to $935 million or 88 cents a share a year ago.

The company reiterated revenue growth for fiscal year in the range of 3% to 4% and diluted earnings per share between $3.66 and $3.70.

NiSource Inc. ((NI)) jumped 1.9% or 51 cents to $27.29 after the energy holding company said total revenue in the fourth quarter surged 9% to $973.2 million.

Net income in the quarter slumped 67%to $134 million or 43 cents diluted per share compared to $14.6 million or 4 cents a share a year ago earlier.

Sealed Air Corporation ((SEE)) surged 8.7% or $1.70 to $21.10 after the food packaging company reported net sales in the fourth quarter rose 1% to $1.98 billion.

Net earnings in the quarter swung to $173.6 million or 89 cents a diluted share compared to net loss of $49.2 million or 25 cents a share a year ago. The earnings in the quarter were ahead of expectations.

The company estimated full year net sales in the range of nearly $7.7 billion to $7.9 billion and adjusted earnings per share between $1.10 and $1.20.