April 3 (Bloomberg) -- U.S. stocks rose for the week, lifting the Standard & Poor's 500 Index to its first weekly gain in four, after higher profit forecasts and stronger-than-expected reports on manufacturing and jobs.
Shares of companies that make computer-related gear and raw materials, two lagging industries in the first three months of 2004, led the week's gains. A growing economy may lead to bigger- than-expected increases in earnings, some investors said.
Sun Microsystems Inc., a supplier of server computers, and metals producers Allegheny Technologies Inc. and Schnitzer Steel Industries Inc. surged.
``The market should continue higher,'' said John Apruzzese, who oversees $44 billion as chief investment officer for the New York region at U.S. Trust. ``Profits continue to come in quite strong.''
The S&P 500 rose 3 percent for the week, the Dow Jones Industrial Average climbed 2.5 percent and the Nasdaq Composite Index gained 5 percent. The increases for the S&P 500 and Dow average were the biggest since Oct. 3, while the Nasdaq's rise was the largest since May.
Sun's Surge
A measure of technology stocks in the S&P 500 gained 4.7 percent for the biggest gain among the index's 10 industry groups, while raw-materials shares added 4 percent. All 10 groups rose.
Sun Microsystems surged 24 percent the past five days. The company settled a decade-long feud with Microsoft Corp., which agreed to pay Sun $1.6 billion to resolve legal disputes. Sun Chief Executive Scott McNealy named as president Jonathan Schwartz, who had headed the company's software unit, and unveiled plans to cut 3,300 jobs.
Allegheny Technologies, the biggest U.S. maker of specialty metals, gained 13 percent and Schnitzer jumped 32 percent. Schnitzer, which recycles steel scrap, said it earned $24.2 million in the fiscal second quarter. In January, the company had forecast a profit of $19 million to $22 million.
Some companies also said earnings in the first quarter, which ended Wednesday, may have been better than previously forecast.
Autodesk Inc., which sells software used to design buildings such as Time Warner Inc.'s New York headquarters, raised its first-quarter profit and sales forecasts for a second time. The shares climbed 8.5 percent for the week.
Higher Profits
PepsiCo Inc., the world's second-largest soft-drink maker, predicted that quarterly and annual profits would be at the high end of forecasts and raised its stock dividend by 44 percent. PepsiCo shares gained 5.5 percent for the week.
Companies in the S&P 500 will boost first-quarter profits, on average, by 16.9 percent, according to analysts polled by Thomson Financial. On Jan. 1, analysts predicted 13.4 percent growth. Alcoa Inc., Abbott Laboratories, Yahoo! Inc. and General Electric Co. are among companies reporting results next week.
Apruzzese said he expects the S&P 500 will rise 8 percent or 9 percent this year. The benchmark gained 1.3 percent in the first quarter, its fifth straight quarterly advance. The Dow fell 0.9 percent and the Nasdaq lost 0.5 percent.
Dow & Jones & Co. announced Thursday its first changes to the Dow average since 1999. Eastman Kodak Co., International Paper Co. and AT&T Corp. will be removed Thursday in favor of American International Group Inc., Verizon Communications Inc. and Pfizer Inc.
Kodak, the world's biggest photography company, dropped 1.5 percent for the week. International Paper, the top maker of lumber and paper, rose 2.6 percent. AT&T, the biggest U.S. long- distance telephone carrier, slipped 2 percent.
American International, the world's larger insurer, finished the week up 5.9 percent. Verizon, the top U.S. local-phone company, gained 3.4 percent. Pfizer, the biggest drugmaker, rose 5 percent in the past week.
Manufacturing, Jobs
A report by the Institute for Supply Management showed Thursday that a gauge of U.S. manufacturing was stronger than expected, lifting stocks. The ISM's factory index for March rose to 62.5 from 61.4. A reading of greater than 50 indicates U.S. industry is expanding.
On Friday, the Labor Department said the U.S. economy created 308,000 jobs in March, the biggest jump in payrolls since April 2000. The employment report exceeded economists' expectations, lifting benchmark indexes Friday and setting the tone for further gains as companies announce earnings.
``Optimism for the number was running high all week,'' said Michael Sgro, equity manager at Chase Personal Financial Services, which oversees $24 billion. ``The timing of this report is excellent -- right before first-quarter earnings. This report, coupled with earnings announcements of the next couples weeks, will drive the market forward.''
Friday's gains pushed the Russell 2000 Index, which tracks companies with a median market value of about $500 million, to 603.45, its highest close since March 2000 and near its record high of 606.05, set that month. The index has gained for seven straight days and rallied 5.3 percent for the week.
``This is confirmation that the economy is really strengthening,'' said Jonathan Scharlau, who manages about $350 million in small- and mid-sized stocks at National City Bank in Cleveland. ``When you're in the early stages of an economic recovery, small-caps tend to lead. We've still in that condition.''
