NEW YORK: U.S. stocks rose Monday, sending the Standard & Poor’s 500 index to a three-month high, as German Chancellor Angela Merkel’s government backed the European Central Bank’s bond-buying plan and company earnings beat forecasts.
Hewlett-Packard Co., Bank of America Corp. and Caterpillar Inc. increased at least 1.5 percent. Cognizant Technology Solutions Corp., a provider of consulting and outsourcing services, climbed 11 percent after raising its forecast.
Best Buy Co. surged 13 percent after founder Richard Schulze offered to take the electronics retailer private at $24 to $26 a share. Knight Capital Group Inc., the firm driven to the brink of bankruptcy by trading losses last week, tumbled 24 percent.
About five stocks advanced for every three that fell.
The S&P 500 rose 0.2 percent to 1,394.23, gaining 2.1 percent in two days. The Dow Jones industrial average added 21.34 points, or 0.2 percent, to 13,117.51. Volume was 5.7 billion shares, or 15 percent below the three-month average.
“The earnings season has surprised because expectations were so low given the economic soft patch which hit the second quarter,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management. His firm oversees about $320 billion. The prospect for bond purchases by the ECB “has also boosted bullish attitudes among investors.”
U.S. stocks followed European shares higher as Merkel’s government backed the ECB’s bond-buying plan announced last week, her deputy spokesman Georg Streiter said Monday. About 73 percent of the S&P 500 companies that reported second-quarter results have beaten earnings estimates even as 59 percent missed sales projections, data compiled by Bloomberg show.
Seven out of 10 groups in the S&P 500 rose Monday as commodity and technology shares had the biggest gains. Hewlett-Packard, the world’s largest maker of personal computers, added 2.4 percent to $18.69. Bank of America gained 2.8 percent to $7.64. Caterpillar, the largest maker of construction and mining equipment, climbed 1.6 percent to $86.35.
Cognizant surged 11 percent to $64.21. The company is gaining revenue as its clients seek savings by outsourcing tasks to India and other lower-cost nations amid a slowing global economy, Chief Financial Officer Karen McLoughlin said. The company has also been building an emerging-technologies business focused on data analysis and mobile solutions.
Best Buy jumped 13 percent to $19.99. Credit Suisse Group AG, Schulze’s financial adviser, is confident it can obtain financing for an offer, according to a letter sent to the board. The offer gives the company an equity value of $8.5 billion.