US STOCKS-Wall St edges up as defensive stocks extend rally

Angela Moon
January 29, 2013

* S&P on track for best month since October 2011

* Pfizer up after results, AT&T also rises

* Amazon shares fall ahead of earnings

* Ford tumbles on forecast of slumping European sales

* Dow up 0.5 pct, S&P up 0.4 pct, Nasdaq down 0.2 pct

NEW YORK, Jan 29 (Reuters) - U.S. stocks advanced on

Tuesday, led by defensive sectors, in a sign the cash piles

recently moving into the market are being put to use by cautious

investors to pick up more gains.

The S&P 500 is on track to post its best monthly performance

since October 2011 and its best January since 1997 as investors

poured $55 billion in new cash into stock mutual funds and

exchange-traded funds in January, the biggest monthly inflow on

record.

Among rising defensive shares, which are companies

relatively immune to economic swings, were drugmaker Pfizer

, up 3.2 percent to $27.71 after posting earnings and

AT&T, 2 percent higher at $34.82.

"After the kind of rally that we had since the beginning of

the year, many investors are becoming more cautious but there is

fundamental reasons to be moving in the direction that we are

moving in," said Joseph Tanious, global market strategist at

J.P. Morgan Funds.

"The 1,500 on the S&P is the psychological barrier but there

are still more tailwinds than headwinds in the market."

The Dow Jones industrial average was up 64.01 points,

or 0.46 percent, at 13,945.94. The Standard & Poor's 500 Index

was up 6.45 points, or 0.43 percent, at 1,506.63. The

Nasdaq Composite Index was down 5.85 points, or 0.19

percent, at 3,148.45.

"Cyclical were moving very nicely, now you see balance with

some of the defensive. Many managers use that as an internal

hedge in equity portfolios," said Quincy Krosby, market

strategist at Prudential Financial in Newark, New Jersey.

She said the market is cautious ahead of Wednesday's

statement following the Federal Reserve's two-day meeting. In

addition, defensive stocks would hold up better if Friday's

payrolls report surprises on the downside.

The S&P hovered near 1,500, and market technicians say the

benchmark is at an inflection point which will determine the

overall direction in the near term.

"The public is pouring in now," said Carter Worth, chief

market technician at Oppenheimer & Co in New York. "It reflects

complacency and that typically leads to hubris, and hubris leads

to trouble. Everyone's buying."

The top performing sectors on the S&P 500 were healthcare

and telecom services, so-called defensive

sectors, both up more than 1 percent.

The energy sector also advanced, on the back of strong

earnings from Valero Energy Corp and a hedge fund move

to break up Hess Corp to boost investor returns.

Valero shares jumped 10.8 percent to $42.99 and Hess gained

8.1 percent to $67.56.

The equity gains have largely come on a strong start to

earnings season, though results were mixed on Tuesday with

Pfizer rising but Ford Motor Co down after its report.

Both companies reported profits that topped expectations,

but Ford also forecast a wider loss in its European segment.

Ford dropped 5.6 percent to $13.01 as one of the biggest

percentage losers on the S&P 500.

Thomson Reuters data showed that of the 174 companies in the

S&P 500 that have reported earnings this season, 68.4 percent

have been above analyst expectations, which is a higher

proportion than over the past four quarters and above the

average since 1994.

Disappointing outlooks from Seagate Technology and

BMC Software pressured their shares. Seagate lost 9.6

percent to $33.82 and BMC fell 8.5 percent to $40.70.

Software maker VMware Inc lost 21 percent to $77.71

also after a cautious 2013 outlook.

Amazon was the biggest drag on the Nasdaq with a

3.2 percent drop to $267.17 before its results, expected after

the closing bell.

U.S. home prices rose in November to rack up their best

yearly gain since the housing crisis began, a further sign that

the sector is on the mend, but consumer confidence fell to its

lowest level in more than a year in the wake of higher taxes for

many Americans.