Corporate earnings spark a rise for stocks

U.S. stocks advanced Friday, giving the Standard & Poor's 500 index its third straight weekly rally, as higher-than-estimated corporate earnings overshadowed the Chinese central bank's attempts to control inflation.

Caterpillar Inc. climbed 2.4 percent after machinery sales rose 49 percent in three months. Intuit Inc. rose 7.3 percent as the maker of tax software forecast a profit that topped estimates. CF Industries Holdings Inc. lost 6.7 percent, leading declines among fertilizer stocks, as wheat fell amid bets Chinese demand will wane. Apple Inc. fell 2.2 percent as the federal government examines whether its media-subscription services violate antitrust laws.

The S&P 500 rose 0.19 percent to 1,343.01. The gauge gained 1 percent this week. The Dow Jones industrial average rose 73.11 points, or 0.59 percent, to 12,391.25. The stock market will be closed Monday for Presidents' Day.

"There's a bullish bias in the market fueled by higher-than-expected earnings," said Frederic Dickson, the Lake Oswego, Ore.-based chief market strategist at D.A. Davidson & Co., which oversees about $29 billion.

"People are waking up and realizing that things are stabilizing so they need to put money to work," he said. "There might be some optimism that China will not have a tsunami. There's a perception that by moving slowly and steadily they can curb growth back to a reasonable rate."

U.S. stocks have risen three straight days, sending the S&P 500 to a 32-month high, as improving corporate earnings and manufacturing data overshadowed higher-than-forecast growth in consumer prices.

Stock-index futures fell earlier Friday as China's central bank raised reserve requirements for lenders 10 days after boosting interest rates as Premier Wen Jiabao tackles accelerating inflation.

Stocks of raw-materials producers had the biggest decline in the S&P 500, dropping 1 percent.

Fertilizer stocks slid as the price of wheat declined for a third time in four days on speculation that China's demand for grain and oilseed will ease after the country took steps to curb inflation.

Lorenzo Bini Smaghi, a European Central Bank Executive Board member, said the bank may need to raise interest rates as global inflation pressures mount.

"As the economy gradually recovers and global inflationary pressures arise, the degree of accommodation of monetary policy has to be monitored and, if needed, corrected," Bini Smaghi said in an interview with the daily newsletter Bloomberg Brief: Economics.

Caterpillar added 2.4 percent, the biggest gain in the Dow average, to $105.86. The maker of construction equipment said retail sales of machinery rose 49 percent worldwide in the three-month period ended in January.

Intuit gained 7.3 percent, the most in the S&P 500, to $54.11. The provider of tax and personal-finance software boosted its forecast for full-year profit excluding some items to as much as $2.48. The average analyst prediction in a Bloomberg survey is for earnings of $2.41 a share.

Apple slumped 2.2 percent to $350.56. The Justice Department and the Federal Trade Commission reportedly are beginning to examine whether Apple's new media-subscription service violates antitrust laws.