U.S. stocks rose for a second day after companies from Intel Corp. to Honeywell International Inc. reported profit that beat estimates and housing starts increased to the fastest rate in almost four years.
Technology stocks had the biggest advance out of 10 groups in the Standard & Poor’s 500 Index as Intel jumped 3.6 percent after posting profit that topped projections while scaling back its annual sales forecast. Honeywell surged 7.1 percent, pacing gains in industrial companies. EMC Corp. rallied 9.8 percent after announcing a new chief executive officer at VMWare Inc., the software maker in which it owns a majority stake.
The S&P 500 gained 0.4 percent to 1,369.42 at 2:50 p.m. in New York. The benchmark gauge jumped 0.7 percent yesterday. The Dow Jones Industrial Average added 76.03 points, or 0.6 percent, to 12,880.24.
“There’s some reduced pessimism about earnings season and the outlook going forward,” Peter Tuz, who helps manage about $800 million as president of Chase Investment Counsel Corp. in Charlottesville, Virginia, said in a telephone interview. “People were expecting worse numbers from lots of companies.”
Housing starts rose 6.9 percent last month to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated, the Commerce Department reported. The median forecast of 79 economists surveyed by Bloomberg News called for a 745,000 rate. Building permits fell, reflecting a drop in applications for apartment construction.
Federal Reserve Chairman Ben S. Bernanke reiterated during his second day of testimony to Congress that the U.S. fiscal situation is “unsustainable.” The central bank said in its survey that is based on reports from its 12 district banks that the world’s largest economy expanded at a “modest to moderate” pace in June and early July, as retail sales and manufacturing cooled in some regions.
Stocks rallied yesterday after Bernanke told senators the central bank is prepared to act to boost growth if the labor market doesn’t improve. The S&P 500 has fallen 3.3 percent since reaching a four-year high in April, as technology and financial companies led declines in equities amid deteriorating economic data and as investors braced for the first decline in quarterly profits since 2009.
Credit Suisse Group AG cut its year-end forecast for the S&P 500 to 1,425 from 1,440, citing the potential of a U.S. economic recession induced by so-called fiscal cliff. Andrew Garthwaite, global equity strategist at Credit Suisse, said he sees a 10 percent chance of the economy contracting should lawmakers do nothing to prevent about $607 billion of tax increases and spending cuts from kicking in at the end of the year. He lowered the 2012 per-share earnings estimate for S&P 500 companies by $1 to $99.6.
Earnings have exceeded analyst estimates at 73 percent of the 63 companies in the S&P 500 that have reported results so far, according to data compiled by Bloomberg. Profits have slumped 4.6 percent for the group and the entire index is projected to report a 2.1 percent decrease in earnings.
Technology and industrial companies had the biggest gains today, rising 1.9 percent and 1.7 percent respectively. Intel, Cisco Systems Inc., Hewlett-Packard Co. and International Business Machines Corp. advanced at least 2.3 percent for the biggest gains in the Dow.
Technology companies “were oversold and due for a bounce,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said by phone. Earnings reports weren’t “as bad as people had expected them to be. That was enough to invite investors to come in and scoop up some attractive names.”
Intel rallied 3.6 percent to $26.30 after reporting second- quarter profit was 54 cents a share, exceeding the average analyst estimate by 2 cents. The world’s largest semiconductor maker also scaled back its annual sales forecast as personal- computer demand fails to rebound among consumers in the U.S. and Europe.
“Intel lowered guidance but it was not unexpected and not disastrous,” Michael James, a managing director of equity trading at Wedbush Securities Inc. in Los Angeles, said in an e- mail. “Pessimism was pretty high and we’re now seeing people both covering and getting long some names. Intel’s leading the the technology group higher.”
Honeywell gained 7.1 percent to $58.41. The company reported second-quarter profit that beat analysts’ estimates, driven by sales in its aerospace unit. The company, which sells airplane parts from navigational systems to brakes, is benefiting from an increase in aircraft production as Boeing Co., Airbus SAS and other plane makers seek to whittle down large backlogs of orders.
EMC surged 9.8 percent to $25.16. The software company said Pat Gelsinger will succeed Paul Maritz as chief executive officer of VMware, giving new management the task of pursuing new products and stepping up growth at the software maker under its control. Maritz will return to EMC, which owns 79 percent of VMware, as chief strategist. VMWare jumped 13 percent to $90.48.
Amphenol Corp. rallied 15 percent to $58.88 for the biggest gain in the S&P 500. The maker of fiber-optic cables lifted its forecast for earnings this year to as much as $3.44 a share from no more than $3.38. That compares with the average analyst estimate of $3.34.
W.W. Grainger Inc. led gains in industrial stocks, rising 11 percent to $210.09. The distributor of building maintenance supplies boosted the lower end of its profit forecast for 2012 to at least $10.50 a share from as little as $10.40.