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Wall St advances led by defensive stocks

Jan 30 2013 07:52 Reuters


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New York - US stocks advanced on Tuesday, led by defensive sectors, in a sign the cash piles recently moving into the market are being put to use by cautious investors to pick up more gains.

The S&P 500 is on track to post its best monthly performance since October 2011 and its best January since 1997 as investors poured $55bn in new cash into stock mutual funds and exchange-traded funds in January, the biggest monthly inflow on record. The Dow Jones industrial average has been flirting with 14,000, a level it hasn't seen since October 2007.

Shares of Amazon.com jumped nearly 7% in extended trade after the world's largest internet retailer posted fourth-quarter revenue that jumped 22% to $21.27bn. The stock closed down 5.7% at $260.35 in regular trading.

Among rising defensive shares, which are companies relatively immune to economic swings, were drugmaker Pfizer , up 3.2% to $27.70 after posting earnings and AT&T, 1.6% higher at $34.68.

"Cyclical were moving very nicely, now you see balance with some of the defensive. Many managers use that as an internal hedge in equity portfolios," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

She said the market is cautious ahead of Wednesday's statement following the Federal Reserve's two-day meeting. In addition, defensive stocks would hold up better if Friday's payrolls report surprises on the downside.

The S&P hovered near 1,500, and market technicians say the benchmark is at an inflection point which will determine the overall direction in the near term.

"The public is pouring in now," said Carter Worth, chief market technician at Oppenheimer & Co in New York. "It reflects complacency and that typically leads to hubris, and hubris leads to trouble. Everyone's buying."

The top performing sectors on the S&P 500 were healthcare and telecom services, so-called defensive sectors, both up more than 1%.

The energy sector also advanced, on the back of strong earnings from Valero Energy Corp and a hedge fund move to break up Hess Corp to boost investor returns.

Valero shares jumped 12.8% to $43.77 and Hess gained 9% to $68.11.

The equity gains have largely come on a strong start to earnings season, though results were mixed on Tuesday with Pfizer rising but Ford Motor Co down after its report.

Both companies reported profits that topped expectations, but Ford also forecast a wider loss in its European segment. Ford dropped 4.6% to $13.14 as one of the biggest percentage losers on the S&P 500.

The Dow Jones industrial average was up 72.49 points, at 13,954.42. The Standard & Poor's 500 Index was up 7.66 points, at 1,507.84. The Nasdaq Composite Index was down 0.64 points, at 3,153.66.

Thomson Reuters data showed that of the 174 companies in the S&P 500 that have reported earnings this season, 68.4% have been above analyst expectations, which is a higher proportion than over the past four quarters and above the average since 1994.

Disappointing outlooks from Seagate Technology and BMC Software pressured their shares. Seagate lost 9.4% to $33.91 and BMC fell 6.3% to $41.71.

D.R. Horton's quarterly profit more than doubled as it managed to sell more homes at higher prices, leading the No. 1 US homebuilder to forecast a good spring selling season. The stock jumped 11.8% to $23.82.

US home prices rose in November to rack up their best yearly gain since the housing crisis began, a further sign that the sector is on the mend, but consumer confidence fell to its lowest level in more than a year in the wake of higher taxes for many Americans.

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