April 19th, 2012

S&P 500 Futures – U.S. stocks swung between gains and losses as better-than-forecast earnings offset disappointing economic data and concern over Europe’s debt crisis.

Bank of America Corp. (BAC) and Morgan Stanley rose more than 0.4 percent as trading revenue helped earnings. Travelers Cos. added 4.8 percent, the most in the Dow Jones Industrial Average (INDU), as the insurer said profit beat analysts’ estimates. EBay Inc. (EBAY) rallied 15 percent as growth in its PayPal payments business boosted results. Qualcomm Inc. (QCOM) declined 4.6 percent after projecting sales and profit that fell short of estimates.

The Standard & Poor’s 500 Index gained 0.1 percent to 1,387.01 at 11:52 a.m. New York time, after dropping as much as 0.4 percent earlier. The Dow rose 16.80 points, or 0.1 percent, to 13,049.55 today.

“The market is in a data-driven holding pattern,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in a phone interview. “You’ve got a lot of counter-balancing points. We got some soft economic data, while earnings are beating expectations. Investors are looking at each incremental data point trying to draw conclusions.”

The S&P 500 fell earlier after reports showed sales of previously owned U.S. homes in March unexpectedly fell, while more Americans than forecast filed applications for unemployment benefits last week. Another report showed manufacturing in the Philadelphia region expanded at a slower pace in April as orders and sales cooled.

European Bonds

Global equities also fell as yields on French and Spanish 10-year bonds climbed at least six basis points, reviving concern about the sovereign debt crisis. Spain sold 2.54 billion euros ($3.3 billion) of two-year and 10-year debt today, compared with a maximum target of 2.5 billion euros. France auctioned 8 billion euros.

Citigroup Inc. economist Michael Saunders said in a note that Moody’s Investors Service is likely to place France’s Aaa rating on review for possible downgrade by the fall.

Profits of the companies listed on the S&P 500 are forecast to rise 1.7 percent in the first quarter and 2 percent in the next, according to analysts’ estimates compiled by Bloomberg. About 85 percent of the 78 companies that have reported earnings since April 10 have exceeded analysts’ projections. The S&P 500 has gained 10 percent in 2012, boosted by better-than-estimated economic and corporate data.

Bank of America

Bank of America rose 0.4 percent to $8.96. The second- largest U.S. lender said first-quarter profit rose amid a rebound in trading and better credit quality. Profit excluding certain one-time items increased about 40 percent to $3.7 billion, or 31 cents a diluted share, from $2.6 billion, or 23 cents, a year earlier. That beat the average per-share estimate of 27 analysts surveyed by Bloomberg of 12 cents.

Morgan Stanley (MS) climbed 1.9 percent to $18. Stock- and bond- trading revenue rose more than at any other major U.S. bank. Profit was 71 cents a share excluding accounting charges, topping the 44-cent average estimate of 17 analysts surveyed by Bloomberg. The KBW Bank Index advanced 0.1 percent.

Travelers added 4.8 percent to $62.34. First-quarter operating profit, which excludes some investment results, was $2.01 a share. That compares with the $1.52 average estimate of 22 analysts surveyed by Bloomberg.

EBay Rises

EBay rose 15 percent to $41.29, the highest intraday since February 2006. The world’s largest Internet marketplace reported sales and profit that topped analysts’ estimates, led by growth in its PayPal online-payments business.

Qualcomm declined 4.6 percent to $63.88. The largest maker of mobile-phone chips projected third-quarter sales and profit that fell short of analysts’ estimates as it increases spending to improve output of chips.

Abby Joseph Cohen, senior U.S. investment strategist at Goldman Sachs Group Inc., said equities will give better returns than bonds in the mid-to-long term as companies look to emerging markets for growth.

“You need to go back to the late 1950s to see a situation which equities were priced as attractively as they are now relative to bonds,” she said in a Bloomberg Radio interview today with Tom Keene. “1958-1959 was a period in which investors were very concerned about the economy and the yields on many equities exceeded the yields on fixed income at that point and — as you know — we moved into a multidecade bull market in equities.”

Obama Re-Election

President Barack Obama’s re-election probably would push the S&P 500 lower this November because investors see his policies as “anti-business,” according to Steven Leuthold, chief executive officer and founder of the Leuthold Global Fund.

“Obama is leading to some degree, and I think if Obama is re-elected it would be somewhat of a negative for the market,” Leuthold said in an interview today on Bloomberg Television’s “In the Loop” with Betty Liu. “He’s kind of viewed still as anti-business. He has a lot of support from Wall Street in terms of money. I’m a social liberal but I’m a fiscal conservative.”

- Nikolaj Gammeltoft and Inyoung Hwang in New York at Bloomberg.