Aug. 29 (Bloomberg) -- U.S. stocks advanced as improved earnings prospects for technology and energy companies helped the Standard & Poor's 500 Index rebound from its steepest drop in three weeks.
Apple Inc. contributed the most to the S&P 500's rally after analysts speculated it will unveil new models of its best-selling iPod media player at a Sept. 5 event. Computer-related shares climbed after Seagate Technology, the world's largest maker of hard-disk drives, said sales were helped by back-to-school demand. Exxon Mobil Corp. led energy shares higher after crude oil prices gained. The S&P 500 added 7.31, or 0.5 percent, to 1439.67 as of 10:26 a.m. in New York. The Dow Jones Industrial Average increased 76.73, or 0.6 percent, to 13,118.58. The Nasdaq Composite Index rose 16.58, or 0.7 percent, to 2517.22. Shares also advanced as traders increased wagers that the Federal Reserve will reduce its benchmark lending rate by 0.5 percentage point at its next policy meeting in September. The S&P 500 posted its biggest drop in three weeks yesterday on weaker consumer confidence and speculation tighter credit markets will hurt bank earnings. ``There are a lot of good opportunities in the market right now,'' said Joseph Keating, who helps manage about $3 billion as chief investment officer at First American Asset Management in Birmingham, Alabama. ``Investors need to be stepping up to the plate.'' Fed funds futures contracts today showed traders see a 44 percent chance the Fed will lower its target for overnight bank lending to 4.75 percent from 5.25 percent at its next meeting on Sept. 18, up from 36 percent odds yesterday. Apple Climbs Apple gained $4.51 to $131.33. The company sent out invitations to a Sept. 5 event showing a silhouetted dancer carrying an iPod, an image from Apple's advertisements. Chief Executive Officer Steve Jobs usually unveils new iPods before the holiday season. Goldman, Sachs & Co. analysts wrote in a note to clients that Apple's announcement ``is likely to include a full line-up of revamped iPods'' and ``provides another reason to own Apple shares.'' Seagate shares rose $1.19 to $25.65. First-quarter revenue will be as much as $3.25 billion, up from a previous forecast of as much as $3 billion, the company said. Profit in the three months ending Sept. 28 will be as much as 61 cents a share, compared with a previous projection of as much as 39 cents, Seagate said. Chipmakers Rise Other makers of computer components also advanced. Intel Corp., the world's biggest semiconductor maker, climbed 52 cents to $24.48. LSI Corp., which designs chips for computer storage, increased 31 cents to $6.68. Earnings at technology companies in the S&P 500 may climb 10.5 percent this year and 22.7 percent next year, according to the average of analysts' estimates compiled by Bloomberg on Aug. 24. The 2008 profit growth estimate is the highest among 10 industry groups. Exxon, the world's biggest energy company, gained 35 cents to $83.35. ConocoPhillips, the third-largest U.S. oil producer, added 46 cents to $79.27. Crude oil for October delivery rose 50 cents to $72.23 a barrel in New York before a report that is expected to show that U.S. stockpiles of crude and gasoline declined. Energy Company Earnings Profits at S&P 500 energy companies may climb 2.5 percent this year and 2.9percent in 2008, based on analysts' estimates. Average earnings for all members of the S&P 500 are expected to rise 9 percent in 2007 and 11.3percent in 2008. Big Lots Inc. climbed $1.75, or 6.7 percent, to $28.05 for the top gain in the S&P 500. The largest U.S. seller of discontinued goods reported second-quarter earnings of 21 cents a share, excluding some items, beating the 12-cent average estimate of 10 analysts in a Bloomberg survey. Williams-Sonoma Inc. jumped $1.89 to $31.46. The biggest gourmet-cookware retailer in the U.S. raised its annual earnings forecast after quarterly profit excluding some items exceeded analysts' estimates. Semtech Corp. added $1.73 to $17.58. The maker of chips used in mobile phones and personal computers said second-quarter profit excluding some costs was 18 cents a share. That topped the 15-cent average analyst estimate in a Bloomberg survey. Dillard's Inc. declined $1.61, or 6.6 percent, to $22.73 for the biggest slide in the S&P 500. The U.S. department-store chain that operates mostly in southern states posted a wider second- quarter loss than analysts anticipated as lower apparel sales prompted the retailer to offer bigger markdowns. PDL BioPharma Inc. dropped $4.74 to $18.86. The developer of technology for cancer medicines said it will divest all of its marketed products, stop developing its lead drug candidate and slash a ``substantial'' number of jobs in a strategic overhaul. In economic data today, mortgage applications in the U.S. declined to a four-week low as the rate on one-year adjustable loans jumped by the most ever. The Mortgage Bankers Association's index of applications to buy a home or refinance a loan fell 4 percent last week to 615.2 from 641.1. The group's purchase and refinancing gauges each decreased for a second week.
