Wall Street gains on GDP data; on track for strong week

By Ryan Vlastelica

NEW YORK (Reuters) – Stocks rose on Friday, putting the S&P 500 on track for its best week in five months, as unexpectedly strong data on economic growth increased confidence that the recovery was accelerating.

Gross domestic product grew at an annual rate of 4.1 percent in the third quarter, the fastest pace in almost two years, and exceeding the 3.6 percent pace reported earlier this month. Business spending was also stronger than previously estimated.

Until recently, investors have viewed positive data as a negative, as it suggested that the Federal Reserve would begin to trim its stimulus program. The central bank had said it would start tapering its monthly bond buying when certain economic indicators met its targets.

The Fed, however, on Wednesday said it would pare its market-friendly monthly asset purchases by $ 10 billion to $ 75 billion, starting in January. It also suggested that its key interest rate would stay at rock bottom longer than previously promised.

“If tapering had not been announced, I don’t think this news would be as welcomed by the market as it is right now,” said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.

“But now, there’s no real risk that there will be more tapering any time soon, and on top of that, growth is absolutely stronger than many were expecting.”

Fed Chairman Ben Bernanke said that if U.S. job gains continue as expected, then the bond purchases would be cut at a “measured” pace through much of next year, and would probably be wound down “late in the year, certainly not by the middle of the year.”

The Dow Jones industrial average <.DJI> was up 103.54 points, or 0.64 percent, at 16,282.62. The Standard & Poor’s 500 Index <.SPX> was up 13.55 points, or 0.75 percent, at 1,823.15. The Nasdaq Composite Index <.IXIC> was up 50.56 points, or 1.25 percent, at 4,108.70.

The benchmark S&P 500 has soared more than 27 percent this year and is on track for its best year since 1997. The Fed’s aggressive economic stimulus program has been the major catalyst for this year’s rally.

For the week, the Dow has climbed 3.3 percent – its best week since the first week of the year. The S&P 500 has gained 2.6 percent this week, marking its best week since July. The Nasdaq has also advanced 2.6 percent this week.

Volume is expected to be active as investors deal with the last “quadruple witching” day of the year, which marks the quarterly expiration and settlement of December contracts for stock options, stock index options, stock index futures and single stock futures.

In addition, most U.S. index funds will adjust their portfolios as a result of quarterly rebalancing by index providers. Credit Suisse expects the rebalancing to result in over $ 30 billion in total trading at today’s close.

Red Hat Inc jumped 16.6 percent to $ 57.12 and ranked as the S&P 500’s best performer after the world’s largest commercial distributor of the Linux operating system reported third-quarter results above analysts’ estimates and raised its full-year forecast.

Blackberry Ltd reported a massive quarterly loss on Friday due to an inventory writedown and asset-impairment charges. Still, BlackBerry’s U.S.-listed shares shot up 15 percent to $ 7.16.

Walgreen Co advanced 3.5 percent to $ 58.91 after reporting higher first-quarter sales.

Oracle Corp was unchanged at $ 36.60, pulling back from an earlier modest gain to $ 36.79, after the No. 2 software maker it would buy Responsys Inc in a deal valued at $ 1.5 billion. Responsys shares surged 38.8 percent to $ 27.09.

Jones Group Inc climbed 5 percent to $ 14.83 after the company said on Thursday that it had agreed to be bought by Sycamore Partners for $ 1.2 billion.

(Editing by Bernadette Baum and Jan Paschal)

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Biogen Earnings Strong, But Celgene Just So-So

Thursday brought a bonanza of earnings reports from leading biotechs, whose sales mostly met expectations while the bottom lines told different stories.

Biogen Idec (BIIB) shares rose 5% to a new closing high of 216 after the company beat analysts’ estimates and raised its 2013 targets.

Celgene (CELG) dipped 33 cents to 117.95 after reporting a more mixed quarter. United Therapeutics (UTHR) plunged early but recovered somewhat, falling 2.5% to 61.67 as investors sorted out its somewhat confusing report.

Former IBD 50 stock Alexion Pharmaceuticals (ALXN) rebounded nearly 11% after it beat estimates on the top and bottom lines.

Biogen Advances, Defends For Biogen, profit minus one-time items jumped 41% over a year earlier to $ 1.97 a share, topping Wall Street’s views by 36 cents. Sales rose 10% to $ 1.42 billion, meeting consensus. The company updated its full-year EPS guidance of $ 7.80 to $ 7.90 vs. the consensus of $ 7.79. It said revenue should rise 16% to 18%, on the high side of expectations.

The results were complicated because even the ex items number included a one-time tax benefit that added 16 cents to EPS. In an email to clients, analyst Mark Schoenebaum of ISI Group wrote that many analysts hadn’t updated their estimates to account for Biogen’s buyout of Elan’s (ELN) share of the multiple-sclerosis drug Tysabri on Feb. 6.

Biogen CEO George Scangos also defended newly launched MS drug Tecfidera against an article in Thursday’s New England Journal of Medicine tying its active ingredient with four cases of a rare brain disease.

“All four cases were seen by the FDA, European regulatory authorities and all regulatory authorities months in advance of approval,” he said on the conference call with analysts. “And I think the Tecfidera label speaks for itself.

Biogen’s stock spiked to a new high Monday after data on the first week of its launch turned out to be very positive. On the call, Tony Kingsley, the company’s global operations chief, said he expects Tecfidera to become the leader in the emerging oral MS drug category.

For Celgene, revenue met expectations for a 15% gain to $ 1.47 billion. Profit rose 27% to $ 1.37 a share, beating by 2 cents, but this was mostly due to analysts overestimating the tax rate, according to Schoenebaum.

The company added a nickel to its full-year EPS guidance to $ 5.55-$ 5.65, yet still below consensus of $ 5.70. It affirmed its previous sales guidance of $ 6 billion, up 11% from last year.

Sales of Celgene’s top drug, multiple-myeloma treatment Revlimid, rose 16% to $ 1 billion, but came in about $ 10 million short of consensus. On the upside, the launch was faster than expected for Pomalyst, approved in early February for the same disease. Its sales totaled $ 29 million, vs. just $ 8 million consensus.

Biotech Bookkeeping At United Therapeutics, revenue rose 20% to $ 245.1 million, about $ 4 million above consensus. Its 87% gross profit margin, though, was a bit light due to unexpectedly high costs. Nonetheless, its accounting methods make comparing earnings to year-ago and consensus numbers unusually complicated.

Earnings per share missed estimates mostly because of the stock-option expense accounting, RBC Capital Markets analyst Michael Yee told IBD via email. The options expense rose, he pointed out, because the stock did. “This swings EPS around and also (is) why consensus EPS ranges widely,” he said.

United Therapeutics shares closed near their session highs Thursday after hitting a record 64 intraday Wednesday.

Alexion revenue, which all hails from its rare-disease drug Soliris, rose 38% to $ 338.9 million, edging past views. Profit jumped 44% to 65 cents a share, beating consensus by a nickel.

Alexion slightly raised guidance. It sees sales of $ 1.51 billion to $ 1.52 billion vs. $ 1.13 billion in 2012. It pegs EPS at $ 2.87 to $ 2.97 vs. $ 2.13 last year. Both were in line with consensus.

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News Summary: Monsanto reports strong 2Q earnings

WASHINGTON (AP) — TOP SEED: Monsanto reported better-than-expected earnings for the second quarter Wednesday on strong sales of biotech corn seeds, particularly in Brazil.

GUIDANCE BOOST: The company raised its full year earnings guidance to between $ 4.40 and $ 4.50 per share, up from $ 4.30 to $ 4.40 per share. The company is expecting a record year sales of corn seed, which increased 17 percent in the quarter.

ROUNDUP REBOUND: Sales of the company’s herbicides, including the weed killer Roundup, increased 37 percent to $ 1.13 billion.

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Strong results give Lindsay a boost

Earnings, Revenue Beat Expectations

Lindsay, a provider of irrigation equipment, earned $ 1.50 a share in its second quarter on revenue of $ 175.5 million. The Street only anticipated $ 1.30 and $ 163.3 million, respectively. Its backlog also nearly doubled to $ 159 million. LNN climbs 4 percent before the bell on my tradeMONSTER platform.

Francesca’s Investors Selling Shares

Francesca’s Holdings announced some of its major shareholders, including members of management, will sell 7.39 million shares. That represents roughly one-fifth of the float. FRAN drops 5 percent in the premarket.

Mattress Firm Higher on Revenue Guidance

Mattress Firm reported weak fourth-quarter earnings, but it projected 2013 revenue of $ 1.24 billion to $ 1.25 billion. That’s better than the $ 1.21 billion expected by analysts, and MFRM climbs 3 percent in early trading.

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Nike shares rise on strong 3Q earnings

NEW YORK (AP) — Shares of Nike Inc. rose to an all-time high after the world’s largest athletic gear maker reported third-quarter net income jumped 55 percent, helped by strength in North America.

THE SPARK: Late Thursday, Nike Inc. reported a much better-than-expected quarter. Strength in North America and improvement in Europe all bolstered results. In addition the company’s gross margin — the percent of each dollar of revenue a company actually keeps — improved for the first time in 10 quarters, reassuring investors.

THE BIG PICTURE: Like most global companies, Nike Inc. has been dealing with Europe’s fluctuating economy and a slowdown in growth in China. Nike has been working to reduce its inventory in China and reworking its offerings there to adapt to the changing tastes of Chinese consumers. It also has been focusing on growth in North America, selling off less profitable brands like Umbro to focus on core brands like Nike. Quarterly results show these changes are working.

ANALYSIS: Cowen & Co. analyst Faye Landes said the quarter was “superlative.” She commended the gross margin improvement, strength in North America and improvement in Europe.

“We believe it’s onward and upward for Nike, with strong product introductions ahead, the most exciting NBA season in many years and the World Cup around the corner,” she wrote.

SHARE ACTION: Shares rose $ 6.46, or 12.1 percent, to $ 60.07 in midday trading, after earlier touching an all-time high of $ 60.25.

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