U.S. Stocks Rise as TXU, Archer Daniels Profits Beat Estimates...

U.S. Stocks Rise as TXU, Archer Daniels Profits Beat Estimates
May 2 (Bloomberg) --

U.S. stocks rallied, sending the Standard & Poor's 500 Index to a five-year high, as earnings from TXU Corp. and Archer Daniels Midland Co. eased concern that rising interest rates may curtail profit growth.

TXU, the largest Texas power producer, led gains among utilities after reporting a 37 percent jump in first-quarter profit on higher electricity prices.

Archer Daniels had its biggest advance since March 2000 as earnings at the world's biggest grain processor rose 29 percent. Energy producers climbed as crude-oil prices approached records set last month.

``We still keep seeing better-than-expected earnings,'' said Cummins Catherwood, who helps manage $800 million at Walnut Asset Management in Philadelphia. ``That gives me encouragement about our economy.''

General Motors Corp. rose, lifting the Dow Jones Industrial Average to the highest since January 2000, as the world's largest automaker said U.S. sales of new, larger sport-utility vehicles increased last month.

The S&P 500 added 8.02, or 0.6 percent, to 1313.21, the highest since February 2001. The Dow average rallied 73.16, or 0.6 percent, to 11,416.45. The Nasdaq Composite Index gained 5.05, or 0.2 percent, to 2309.84.

Bernanke

Stocks made up all of their declines from a day ago, when remarks attributed to Fed Chairman Ben S. Bernanke by television network CNBC suggested the central bank may not pause its series of 15 straight interest-rate increases soon. Treasury yields fell today as a report showing that pending home resales fell to a two-year low eased concern that the central bank will keep boosting borrowing costs to slow the housing market.

Two stocks rose for every one that fell on the New York Stock Exchange. Some 1.72 billion shares changed hands on the Big Board, 6.1 percent more than the three-month daily average.

Better-than-expected reports have lifted the earnings growth rate for S&P 500 companies in the first quarter to 14.1 percent, from 13.6 percent a week ago, according to Merrill Lynch & Co. chief market analyst Mary Ann Bartels.

TXU jumped $7.59, or 15 percent, to $57.50 for the best performance in the S&P 500. First-quarter profit climbed 37 percent to $576 million, or $1.22 a share, as the company sold more low-cost output from coal-fired plants.

TXU's rally helped send a gauge of utilities up 1.8 percent for the second-best performance among 10 industry groups in the S&P 500. The measure slid 0.9 percent yesterday as Bernanke's comments pushed bond yields higher, making the dividend payouts of utilities less attractive.

Archer Daniels

Archer Daniels climbed $3.90, or 10 percent, to a record $41.90. The company said third-quarter profit rose to 53 cents a share as ethanol prices increased. Analysts estimated 46 cents in a survey by Thomson Financial. Archer Daniels, the top U.S. producer of ethanol, is expanding output as gasoline demand and prices soar.

GM climbed 57 cents, or 2.5 percent, to $23.21 for the best performance in the Dow average. The shares rallied after the automaker's April results indicated that sales of new, large SUV's increased. JPMorgan analyst Himanshu Patel said in a note to clients that ``strong sales'' of GM's new T900 SUV model and full-size pickups is an indication of a ``positive'' sales mix. GM's overall U.S. sales slid 11 percent in April.

Bond Yields

The yield on the 10-year Treasury note today fell 3 basis points, or 0.03 percentage point, to 5.11 percent in New York, according to bond broker Cantor Fitzgerald LP. Investors digested yesterday's CNBC report that Bernanke said markets may have misinterpreted his comments last week that the central bank may slow the pace of interest-rate increases.

``Investors may be looking at the Bernanke situation today and saying that it was a lot to do about nothing,'' Catherwood said. ``The economy is still good, and we don't really know and we still won't know when they are going to stop raising rates.''

Stocks had rallied on April 27 after the Fed chairman said in congressional testimony that policy makers may ``decide to take no action at one or more meetings.''

Sirius Satellite Radio Inc. added 26 cents to $4.88. The provider of pay-radio service said first-quarter loss was 33 cents a share, narrower than the 36 cents analysts expected. Sirius anticipates having more than 6.2 million subscribers at the end of this year, up from a previous forecast of 6 million. Howard Stern's radio show helped lure 761,200 subscribers, outpacing larger rival XM Satellite Radio Holdings Inc.

Emerson Electric Co. gained $1.11 to $86.53. The world's largest maker of power supplies for telecommunications systems raised its forecast for the year, saying it expects to earn as much as $4.35 a share on higher sales, up from its earlier projection of $4.10 to $4.30 a share.

Verizon Earnings

Verizon Communications Inc. climbed as much as 1.3 percent after the second-largest U.S. telephone company said first- quarter profit excluding some costs was 60 cents a share, beating a 59-cent estimate by UBS AG analyst John Hodulik. The company added a record 1.7 million wireless customers. The shares ended down 15 cents at $32.64.

St. Paul Travelers Cos. added $2.20, or 5.1 percent, to $45.60 for the fourth-biggest gain in the S&P 500. The No. 2 U.S. commercial insurer said first-quarter profit increased almost fivefold as the company paid fewer claims from severe weather. St. Paul boosted its full-year earnings forecast by 30 cents, estimating earnings of $4.70 to $5 a share, before investment gains and losses.

Energy Stocks

A gauge of energy stocks climbed 2.3 percent for the best performance among 10 industry groups in the S&P 500. Oil prices rose for a third day on speculation that Iran's nuclear program may spur a confrontation with the U.S. and disrupt supplies from the world's fourth-biggest producer.

Exxon Mobil Corp., the world's largest publicly traded oil company, climbed $1.25 to $64.67. Crude oil for June delivery gained 1.2 percent to $74.61 a barrel, the second-highest close in the history of the contract.

Apple Computer Inc., maker of the iPod digital music player, gained $2.02 to $71.62. The company said it renewed contracts with the four largest record companies to continue offering songs at 99 cents each through the iTunes music store.

Hovnanian Enterprises Inc. lost $2.39 to $36.39. New Jersey's largest homebuilder said fiscal second-quarter earnings and new orders fell because of a slowdown in the housing market.

Home Sales

Hovnanian's results mirror a National Association of Realtors report today that showed contracts to purchase previously owned homes decreased in March to a two-year low as buyers were deterred by rising mortgage rates. The index of signed purchase agreements fell 1.2 percent to 116.2, the lowest reading since February 2004. Economists expected a drop of 0.5 percent in a Bloomberg News survey.

``The real estate cycle in the U.S. is obviously very mature,'' said Mohamed El-Erian, who runs Harvard University's $25.9 billion endowment fund. ``On the residential side, there are clear concerns out there that it may have gone too far.''

Homebuilders including Lennar Corp. and Pulte Homes Inc. accounted for three of the 10 biggest declines in the S&P 500. Lennar, a Miami-based homebuilder, slid $1.13, or 2.1 percent, to $53.24. Pulte Homes, which last month said first-quarter profit rose at the slowest pace in three years, dropped 85 cents, or 2.3 percent, to $35.75.

An S&P gauge of 16 homebuilders lost 1.4 percent and reached its lowest close since April 2005.

Shares of metals producers with interests in Bolivia including Apex Silver Mines Ltd. and Coeur d'Alene Mines Corp. tumbled on speculation the country will seize mining assets after the government took control of oil and gas fields held by foreign companies.

Denver-based Apex slumped $3.30 to $17.70. The stock had surged 60 percent in the past year as silver prices more than doubled, reaching a 23-year high. Coeur d'Alene dropped 57 cents to $6.31.