U.S. Stocks Fluctuate as Corporate Profits Offset China Concern

U.S. stocks avoided a second straight weekly decline as corporate profits higher than expected and the acquisition of Caterpillar Inc. 's Bucyrus International Inc. overcome concerns about the decision by China to cool inflation.

Caterpillar, the world's largest maker of construction equipment, rose 3.6 percent this week for the biggest gain in the Dow Jones Industrial Average. Salesforce.com Inc., the fourth-best performance at 500 Standard & Poor's in 2010, up 19 percent of its sales forecast beat estimates. Urban Outfitters Inc. rose 13 percent and Dell Inc. gained 3.5 percent after its earnings beat forecasts.

The S & P 500 gained less than 0.1 percent to 1,199.73 this week after falling 2.2 percent the previous week. The index fell 1.6 percent on 16 November, the biggest drop since August, amid concerns that the debt crisis in Ireland and Greece is getting worse and Chinese measures to combat inflation, slow down economic growth. The Dow rose 10.97 points, or 0.1 percent, at 11,203.55.

"From a domestic perspective, the economy pick up, employment is improving and earnings are pretty good," said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees $ 105 billion. "Things will be chopping, but in an environment of increased internal."

The S & P 500 gained 5.1 percent since Sept. 30 as third-quarter profit beat analyst forecasts of 6.6 percent for the 457 companies that have reported. It was the sixth consecutive period in which more than 70 percent of companies beat expectations, the longest stretch since at least 1993.

Concern over China

The shares fell 16 November amid efforts by China's concern to curb inflation will slow global growth. benchmark indices opened lower yesterday after Bank of China ordered a 50 basis point increase in the amount of money lenders must set aside reserves, after two days of the cabinet announced measures to fight inflation.

Caterpillar rose 3.6 percent to $ 83.97. The world's largest maker of construction equipment, agreed to buy Bucyrus from 7.6 billion to add shovels and drills for its range of machinery for mining. Bucyrus recovered 28 percent to $ 89.20.

Salesforce.com rose 19 percent to $ 136.74 for the biggest gain in the S & P 500. The largest online software vendor relationship management with customers forecast fourth-quarter sales that beat analysts' estimates after attracting about 28 percent more paying customers than a year ago.

Urban Outfitters advanced 13 percent to $ 37.26. The clothing retailer reported third-quarter profit that topped analysts' average forecasts of a 13 percent increase in sales.

Cheaper parts

Dell rose 3.5 percent to $ 13.90. The third largest supplier of personal computers reported profit that beat analyst estimates. Dell benefited from lower prices for parts and spending dynamic companies that are upgrading aging personal computers and servers.

Merck & Co. rose 1.8 percent to $ 35.33. An experimental drug the pharmaceutical world's second largest increase levels of good cholesterol, reduce bad cholesterol and may have helped patients avoid cardiac complications, without the security risks that prompted Pfizer Inc. to abandon a product similar four years ago.

PulteGroup Inc. fell 13 percent to $ 6.50. The largest U.S. homebuilder by income fell after builders in the U.S. began work on houses less than expected in October as the industry was mired near the depth reached during the recession. Residential construction fell at an annual rate of 519,000, lowest since the record low in April 2009.

D.R. Horton Inc., the second largest homebuilder, lost 9 percent to $ 10.48. Home Depot Inc., the largest U.S. retailer home improvement, fell 0.7 percent to $ 31.22.

Travelers Cos. fell 1.5 percent to $ 55.49. The insurer, which held municipal debt worth 41.4 billion U.S. dollars at the end of the third quarter, fell after a sell municipal bonds. Investors retreated the most in almost 19 years of indefinite U.S. municipal bond funds in the week ended November 17 as the growing concern that cities and states are deteriorating finances.