US STOCKS-Wall Street up as bargain hunters step in after rout

Tue Feb 4, 2014 12:48pm EST

* J.C. Penney shares slide after bearish comments

* Yum Brands reaffirms 2014 profit outlook, shares jump

* Michael Kors stock soars after results

* Indexes up: Dow 0.6 pct, S&P 0.85 pct, Nasdaq 1 pct

By Rodrigo Campos

NEW YORK, Feb 4 (Reuters) - U.S. stocks bounced back on Tuesday, underpinned by sturdy corporate results, as the market fought to regain its footing following its largest selloff in months a day earlier.

Monday's sharp decline, on the back of weaker-than-expected U.S. data, concerns over growth in China and the outlook for some emerging economies, opened the door for traders looking for bargains. Consumer and financial stocks were leading the gains on the S&P 500.

Investors have focused on macroeconomic data in the wake of a rout in emerging market currencies, which triggered rate hikes by some central banks. That pressured stocks and bonds and forced investors to favor assets perceived as relatively safe, like the yen and U.S. and German government debt.

The price of protection against further drops on the S&P 500 dropped 13 percent after hitting Monday its highest level in 13 months. The CBOE Volatility Index was below 19.

"Yesterday was really the first concerted selloff, indiscriminate as to individual stocks," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

"With that type of selling going on, this morning you're seeing some bargain hunters looking for oversold opportunities."

He said sectors that saw heavy selling despite stable profit pictures included financials and retailers, which were among the leaders in Tuesday's bounce-back.

Data on Tuesday showed new orders for U.S. factory goods fell in December, but rose for a third straight month when the volatile transportation sector was excluded.

The Dow Jones industrial average rose 92.35 points or 0.6 percent, to 15,465.15, the S&P 500 gained 14.75 points or 0.85 percent, to 1,756.64 and the Nasdaq Composite added 41.623 points or 1.04 percent, to 4,038.582.

Of the 277 companies in the S&P 500 that have reported earnings so far this season, 69.3 percent have beaten analysts' profit expectations, while 65.2 percent have exceeded revenue expectations, according to the latest data from Thomson Reuters.

Pfizer was among the leaders on the S&P 500 with a 2.5 percent gain to $31.37 after a bullish note from Jefferies.

Michael Kors Holdings Ltd reported a 77 percent jump in third-quarter profit as shoppers snapped up its handbags and accessories, sending its shares up 18 percent to $90.43.

Bank shares were underpinned by U.S-traded shares of UBS and Itaú Unibanco, which rallied. Itaú, Brazil's largest private-sector lender, reported record fourth-quarter profit that beat analysts' estimates. UBS swung to a larger-than-expected fourth-quarter profit and announced higher dividends and bonuses.

Itaú ADRs rose 8.8 percent to $13.10 and UBS added 5.8 percent to $20.33.

J.C. Penney Co Inc shares slid 9.2 percent to $5.16, reversing a steep gain in premarket trading. It reported a modest rise in quarterly comparable sales but gave no details on its gross profit margin, leading analysts to conclude it had to resort to bigger discounts during the holiday season. JPMorgan and Sterne Agee cut the target price of the stock, JPMorgan to $5 from $6 and Sterne Agee to $3 from $9.

Shares of Yum Brands Inc rose 8.5 percent to $71.79 after the KFC parent reaffirmed its 2014 profit outlook and said a resurgent bird flu in China had not hurt national sales in its top market.

Furiex Pharmaceuticals shares more than doubled in price. The drugmaker said an experimental drug met the main goal of a pair of large clinical trials by significantly alleviating diarrhea and abdominal pain associated with irritable bowel syndrome. Shares were up 132 percent at $106.70.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.