U.S. STOCKS: Up Slightly After Strong Cisco Systems Earnings

Date : 11/14/2012 @ 10:30AM
Source : Dow Jones News

U.S. STOCKS: Up Slightly After Strong Cisco Systems Earnings

   By Jonathan Cheng 

U.S. stocks inched higher Wednesday, one day after falling to a three-month low, as encouraging earnings from Cisco Systems lifted technology shares.

The Dow Jones Industrial Average gained nine points, or 0.1%, to 12765, one day after falling to its lowest level since late July. The Standard & Poor's 500-stock index tacked on three points, or 0.2%, to 1378, and the technology-heavy Nasdaq Composite rose 13 points, or 0.5%, to 2897.

The technology sector led the morning's gains, following the strong earnings report from Cisco, a Dow component. The network-equipment maker jumped 7.3% after its quarterly earnings and revenue exceeded analysts' expectations, helped by strength in its services business.

Rival Juniper Networks benefited, rallying 2.4%. In other tech gainers, Hewlett-Packard and Intel rose 1.1% and 0.8%, respectively. Telecommunications stocks were also strong. AT&T climbed 0.4%, and Verizon Communications added 0.7%.

Weighing on the downside were materials and utilities shares.

Overseas, European markets declined. The Stoxx Europe 600 eased 0.4%, and London's FTSE 100 gave up 0.6% after downbeat economic data from the euro-zone and the U.K.

Euro-zone industrial production for September fell 2.5%, the largest monthly decline since January 2009. In Portugal, economic growth fell 0.8% in the third quarter, its eighth-consecutive quarter of contraction, while Greece's third-quarter GDP fell 7.2% after contracting 6.3% in the second quarter.

The Bank of England said inflation rose an annual 2.7% in October, well above the target rate of 2%, prompting the central bank to freeze its bond-buying stimulus program in November.

On the bright side, Italy auctioned off the maximum targeted amount of government bonds. Yields came in lower than at previous auctions.

Asian markets nudged higher, bouncing from a recent string of losses, with the conclusion of China's 18th Party Congress helping ease some investor uncertainty. Japan's Nikkei Stock Average inched up less than 0.1% to snap a seven-session losing streak, while China's Shanghai Composite rose 0.4%.

In U.S. economic headlines, retail sales dropped 0.3% in October as a result of the storm that hit much of the East Coast late that month. Economists had expected a 0.2% decline. Excluding autos, retail sales were flat, falling short of the 0.2% gain economists expected.

Wholesale prices fell 0.2% in October from the previous month, the first drop in five months. Economists had expected a 0.2% increase. So-called core prices, which exclude the volatile energy and food components, fell 0.2% in October, against expectations for a rise of 0.1%.

Business inventories in September, due out at 10 a.m., are expected to rise 0.6%.

Crude-oil futures eased to about $85.30 a barrel, while gold futures were roughly flat at about $1,725 an ounce. The dollar lost ground against the euro but rallied strongly against the yen. Treasurys eased, sending the yield on the benchmark 10-year note up to 1.62%.

In other corporate news, Abercrombie & Fitch shot up 29% after the teen-apparel retailer reported quarterly earnings and revenue that topped analysts' forecasts, boosted by strong international and direct-to-consumer sales growth. Its full-year earnings outlook was also well above current projections.

Abercrombie's strong report lifted other teen retailers. American Eagle Outfitters gained 1.9%, Urban Outfitters added 18%, and The Gap rose 2.6%.

Facebook soared 7.9% as investors positioned for the expiration of lockups that will make about 804 million shares available for trading Wednesday--nearly double the amount of the existing public float.

Zynga gained 4.3% after the social games maker said its chief financial officer, David Wehner, was leaving the company to pursue a senior finance position at Facebook. The company also affirmed its 2012 financial outlook.

Mosaic slumped 3.2% after the fertilizer company offered a less-upbeat outlook on sales volume and prices for the current quarter, citing a decline in international demand.

Staples climbed 3.7% after quarterly earnings at the retailer of office supplies came in better than expected. It said it expected full-year earnings to rise above year-ago levels, compared with current forecasts for a slight decline.

Iamgold declined 14% after the miner's quarterly earnings and revenue missed forecasts amid a decline in gold sales. The company lowered its capital-expenditure outlook for 2013 as a result of delayed approval of a sulphide project.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

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