U.S. Stocks Rise on Yahoo, Morgan Stanley Results; Dollar Falls

used in digital cameras and mobile phones, jumped 10 percent after its sales forecast topped estimates. “Companies prepared investors for very mediocre results,” said Robert Lutts , president of Cabot Money Management in Boston, which manages $450 million. “They lowered the bar very low and now are jumping over those bars.” The Standard & Poor’s 500 Index added 0.6 percent to 1,097.28 at 11:17 a.m. in New York and earlier climbed above its highest close of the year. The Dow Jones Industrial Average increased 39.98 points, or 0.4 percent, to 10,081.46. About three Stocks advanced for each that fell on the New York Stock Exchange. The S&P 500 has rallied 62 percent from a 12-year low in March as the government lent, spent or guaranteed $11.6 trillion to combat the worst U.S. recession since the 1930s. The rebound left the benchmark index trading at about 20.6 times the reported Earnings of its companies, the highest since 2004. Earnings Season Profit has topped estimates at 76 percent of the S&P 500 companies that have posted third-quarter results, including Google Inc., JPMorgan Chase & Co. and DuPont Co. More than 130 S&P 500 companies are reporting this week. Yahoo rose 4.5 percent to $17.95. Third-quarter profit excluding some expenses was 15 cents a share, beating the average prediction of 13 cents by analysts in a Bloomberg survey. Sales, excluding fees passed on to partner sites, were $1.13 billion, exceeding projections. SanDisk Corp. soared 10 percent to $23.63. The biggest maker of flash-memory cards used in digital cameras and mobile phones forecast fourth-quarter sales that beat analysts’ estimates as chip prices rebounded. Apple Inc., maker of the iPhone mobile phone, iPod music players and MacIntosh computers, rose 3.1 percent to a record $204.91 and contributed most to the S&P 500’s advance. Morgan Stanley Jumps Morgan Stanley rallied 6.5 percent to $34.63. The sixth- largest U.S. bank by assets reported its first profit in a year, surpassing analysts’ estimates on higher investment-banking fees. Third-quarter Earnings were $757 million, or 38 cents a share. The average estimate of 21 analysts was for profit of 30 cents a share. U.S. Bancorp climbed 6.7 percent to $25.38. The Minneapolis-based lender that has expanded during the financial crisis said third-quarter profit rose 4.7 percent on higher net interest margins and fees from mortgage banking and transactions at automated teller machines. SLM Corp. soared 19 percent to $10.61 for the biggest advance in the S&P 500. The largest U.S. student loan company reported its first profit in more than a year. Treasury Secretary Timothy Geithner said the bank capital- purchase program in the $700 billion bailout will be allowed to expire later this year because parts of the economy and markets are stabilizing, Reuters reported, citing an interview. “We are now at the point where we can begin to wind down the programs that really defined TARP in its initial stages,” Reuters quoted Geithner as saying in the interview today, referring to the Troubled Asset Relief Program. Boeing Slumps Boeing Co., the second-largest maker of commercial aircraft, fell 1.1 percent to $51.34 after Booking $3.5 billion in charges for the delayed 787 Dreamliner and 747-8 jumbo jet programs. Its largest-ever net loss of $1.56 billion, or $2.23 a share, exceeded the $2.10-a-share average estimate of 18 analysts in a survey. Per-share Earnings for the 97 companies in the S&P 500 that released third-quarter results since Oct. 7 were down 11 percent from the year-earlier period. Per-share profit fell in each of the past eight quarters, a record streak of declines that analysts expect to end in the current quarter. The Dollar Index, which gauges the U.S. currency against a basket of six trading partners, Slumped 0.5 percent to a 14- month low. The pound and the New Zealand dollar rose after central bankers signaled interest rates may increase. The U.K. currency climbed 1.4 percent against the dollar and the New Zealand dollar strengthened 0.6 percent. Bank of England Governor Mervyn King started preparing Britons for higher interest rates, writing in the Herald newspaper of Scotland that “it would be wise to take account” of the prospect of rising borrowing costs. Reserve Bank of New Zealand Governor Alan Bollard said a strengthening currency isn’t an obstacle to raising rates. Australia last week became the first Group of 20 nation to lift its benchmark rate since the start of the global financial crisis. The Fed will issue its Beige Book report on regional economies, which policy makers will use to gauge the state of the housing market and the overall economy when they meet in the first week of November, at 2 p.m. in Washington today. To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net . Last Updated: October 21, 2009 11:19 EDT