* Hewlett-Packard rallies after results, lifting tech shares
* Benchmark index fell about 2 percent in two previous
* Abercrombie & Fitch leads decliners after disappointing
* Indexes up: Dow 0.7 pct, S&P 0.6 pct, Nasdaq 0.7 pct
By Edward Krudy
NEW YORK, Feb 22 U.S. stocks rebounded from two
days of losses on Friday as Dow component Hewlett-Packard surged
on strong results, but the S&P 500 index was on track to end a
seven-week winning streak.
Hewlett-Packard Co jumped nearly 14 percent and was
the top boost on both the Dow and S&P 500 after the personal
computer maker's quarterly revenue and forecasts beat
HP's results come near the end of relatively strong earnings
season in which 70 percent of S&P 500 companies beat analysts'
expectations, compared with a 62 percent average since 1994 and
65 percent over the past four quarters.
"Overall the earnings supports were better than expected in
this cycle," said Peter Jankovskis, co-chief investment officer
at OakBrook Investments LLC in Lisle, Illinois. "We may see the
market rising during the month of March."
The Dow Jones industrial average gained 93.67 points,
or 0.67 percent, to 13,974.29. The Standard & Poor's 500 Index
rose 9.03 points, or 0.60 percent, to 1,511.45. The
Nasdaq Composite Index rose 21.45 points, or 0.68
percent, to 3,152.94.
Also helping stocks, Federal Reserve Chairman Ben Bernanke
downplayed worries the Fed has fueled asset bubbles that could
hurt the economy. Bernanke's view helped allay fears that the
central bank may end its easy money policies.
Investors will be looking for Bernanke to reiterate those
remarks, made in a private meeting with bond dealers and
investors earlier this month but reported by Bloomberg on
Friday, when he speaks before the Senate Banking Committee on
The S&P 500 shed 1.9 percent over the previous two sessions,
its worst two-day drop since early November. The retreat was
triggered when the Federal Reserve's meeting minutes for January
suggested stimulus measures may be halted sooner than thought.
For the week, the S&P is off 0.5 percent and the Nasdaq is
off 1.2 percent.
Fourth-quarter earnings for S&P 500 companies are estimated
to have risen 6 percent, according to the data, above a 1.9
percent forecast at the start of the earnings season.
Marvell Technology Group Ltd forecast results this
quarter that were largely above analysts' expectations. Marvell
gained market share in the hard-disk drive and flash-storage
businesses. The stock rose 4.4 percent to $9.88.
But with only a handful of companies left to report
earnings, investors are looking ahead to the possibility of
hefty automatic budget cuts that could happen on March 1.
A large option investor appears to be adjusting a bearish
view on the SPDR S&P 500 Trust fund while locking in
previously established gains, in a possible hedge prior to the
automatic budget cuts.
"An institutional investor appears to be rolling down and
increasing in size a defensive hedge timed to match the March 1
deadline for the sequester," said Henry Schwartz, president of
options analytics firm Trade Alert.
Texas Instruments Inc raised its dividend by a third
and boosted its stock buyback program, lifting shares 4.7
percent to $34. The PHLX semiconductor index gained 1.9
"Dividends growing are another way the market's level is
justified, if not especially attractive at these levels," said
Rex Macey, chief investment officer at Wilmington Trust in
Atlanta, Georgia, who manages about $20 billion in assets.
On the downside, Abercrombie & Fitch dropped 5.1
percent to $46.55 after the clothing retailer reported a drop in
fourth-quarter comparable sales, even as its latest quarterly
earnings topped estimates.
Insurer American International Group Inc posted
fourth-quarter results that beat analysts' expectations. Shares
advanced 2.3 percent to $38.13.