U.S. Stocks End Higher; Dow Closes At 14,000 For First Time
NEW YORK (MarketWatch) -- With upbeat earnings from technology giant IBM Corp. paving the way, Wall Street advanced Thursday on mainly optimistic earnings reports, taking the Dow Industrials to its first-ever close above 14,000.
Stocks pared some gains after the release of minutes from the Federal Reserve's June meeting, which seemed to bolster the view that the central bank would not be cutting rates soon. But investors quickly reversed course and returned to buying.
"The market is once again showing there is a lot of money on the sidelines and a lot of folks want in." said Al Goldman, chief market strategist at AG Edwards. "IBM is helping a lot."
The Dow Jones Industrial Average ended 82 points higher at 14,000, as 20 of its 30 stocks advanced, led by the likes of Hewlett-Packard , Altria , and American Express .
Alcoa Inc. reversed course on earlier gains, with its stock down nearly 7% on a report the aluminum giant is not longer being eyed as an acquisition target by BHP Billiton PLC .
The blue-chip average crossed the 14,000 mark for the first time on Tuesday, punching in a record high of 14,022.
Leading the Dow's advance Thursday, IBM gained 4.3%, after reporting its strongest quarterly performance since 2002, with its profit up 12% led by sales of IT services to corporations.
Microsoft Corp. rose 1.9% ahead of reporting earnings after the close.
Honeywell International Inc. , another Dow component, gained 0.7%, after posting stronger-than-expected earnings and lifting its 2007 guidance. The stock touched a 52-week high on Tuesday.
The S&P 500 index gained 6.9 points to 1,553, while the Nasdaq Composite rose 20.6 points to 2,720.
On the New York Stock Exchange, 1.5 billion shares exchanged hands, while 2.2 billion were traded on the Nasdaq. Advancing issues beat decliners 5 to 3 on the NYSE and by 17 to 11 on the Nasdaq.
Tech takes off
By sector, technology , metals-mining stocks and transportation stocks were among those advancing, while financial services , banking stocks , and broker/dealers ed the declines.
Software firms also received a lift after Germany's SAP said its profit rose a stronger-than-forecast 8%, helped by a low tax rate and market share gains. Its shares jumped 7%.
Shares of Juniper Networks Inc. also helped lift the tech sector, jumping almost 12% after Goldman Sachs upgraded the stock to buy from neutral. The broker said Juniper's new routing products should help it regain some of the market share it has lost to Cisco Systems Inc. .
Meanwhile, EBay Inc. fell 1.5% after reporting that its global listings fell 6%, offsetting the 50% profit rise it posted for the second quarter.
Google and Microsoft, both of which report earnings after the close, also drew buying interest to the tech sector.
Financial hit
Financial shares, the most influential sector in the market, slumped for a second consecutive day, as subprime worries reentered the market, with Standard & Poor's downgrading more mortgage-backed securities. The agency on Thursday cut ratings on 418 classes of residential mortgage-backed securities, saying losses would "significantly" exceed its expectations.
Goldman Sachs Group Inc. declined 1.4%; Morgan Stanley nearly 1.4%; and Merrill Lynch & Co. Inc. descended 1%.
And, in a second day of congressional testimony, Federal Reserve Chairman Ben Bernanke added his voice to the mix, predicting "significant losses" from subprime mortgage paper.
Also adding fuel to the subprime fire was a forecast that the economy is due to retract in coming months, in part due to an ongoing slowdown in the housing sector. The Conference Board's Index of Leading Economic Indicators declined 0.3%, a larger drop than anticipated.
On Wednesday, the market ended lower amid jitters over the impact of subprime mortgages and the two now nearly worthlesBear Stearns funds that had invested heavily in them.
Large banks also fell after an analyst downgraded several of them, saying they weren't shielded from the meltdown in the subprime mortgage market.
Financials first received a boost early Thursday, after Bank of America posted a better-than-forecast 5% profit rise. Online broker TD Ameritrade , meanwhile, lifted its earnings guidance for the year.
Oil boost
With investor focus set on earnings, crude oil prices above $75 haven't yet set off any concerns about rising costs for U.S. consumers and businesses. Instead, the energy sector, has lent a helping hand to the market.
On Thursday, Crude oil futures neared $76 a barrel.
"Investors are willing to tolerate higher rates and higher oil prices if the cause is expanding economic growth," said Marc Pado, market strategist at Cantor Fitzgerald. "They are a little less happy if we have to deal with these issues and face an economy still languishing below trend."
Fed's view little changed
Meanwhile, minutes from the Federal Reserve's last meeting on interest rates suggested that some Fed members are more concerned about inflation than Fed Chairman Ben Bernanke.
But the minutes lacked "any reference to FOMC members contemplating scenarios that could lead to future interest rate hikes," said Miller Tabak & Co. fixed-income analyst Tony Crescenzi.
The dollar traded mixed against other major currencies, the euro at $1.317 vs. $1.3795 late Wednesday. The dollar was quoted at 121.99 yen, compared with 121.93 yen.
Gold futures gained more than $4 an ounce and copper rallied almost 3%, sending the benchmark contracts for both metals to their highest closes in more than two months. Gold for August delivery ended $4.40 higher at $678.10 an ounce, while September cooper gained 2.8%, or 9.9 cents, to end at $3.662 a pound.
Treasury prices were little changed, with the 10-year note finishing flat at 95 29/32, its yield climbing to 5.033%.
Earnings
In other earnings news, Continental Airlines said it posted its best profit before tax since 2000.
Motorola Inc. swung to a small loss in the second quarter as sales of mobile phones deteriorated in Asia and Europe.
Elsewhere, PepsiCo fell 1% after a report from The Wall Street Journal that it held merger talks with Nestle that collapsed due to the Swiss food giant's reluctance to pair with a firm that generated the bulk of its sales from potato chips and soda.
By Kate Gibson
MarketWatch Stocks pared some gains after the release of minutes from the Federal Reserve's June meeting, which seemed to bolster the view that the central bank would not be cutting rates soon. But investors quickly reversed course and returned to buying.
"The market is once again showing there is a lot of money on the sidelines and a lot of folks want in." said Al Goldman, chief market strategist at AG Edwards. "IBM is helping a lot."
The Dow Jones Industrial Average ended 82 points higher at 14,000, as 20 of its 30 stocks advanced, led by the likes of Hewlett-Packard , Altria , and American Express .
Alcoa Inc. reversed course on earlier gains, with its stock down nearly 7% on a report the aluminum giant is not longer being eyed as an acquisition target by BHP Billiton PLC .
The blue-chip average crossed the 14,000 mark for the first time on Tuesday, punching in a record high of 14,022.
Leading the Dow's advance Thursday, IBM gained 4.3%, after reporting its strongest quarterly performance since 2002, with its profit up 12% led by sales of IT services to corporations.
Microsoft Corp. rose 1.9% ahead of reporting earnings after the close.
Honeywell International Inc. , another Dow component, gained 0.7%, after posting stronger-than-expected earnings and lifting its 2007 guidance. The stock touched a 52-week high on Tuesday.
The S&P 500 index gained 6.9 points to 1,553, while the Nasdaq Composite rose 20.6 points to 2,720.
On the New York Stock Exchange, 1.5 billion shares exchanged hands, while 2.2 billion were traded on the Nasdaq. Advancing issues beat decliners 5 to 3 on the NYSE and by 17 to 11 on the Nasdaq.
Tech takes off
By sector, technology , metals-mining stocks and transportation stocks were among those advancing, while financial services , banking stocks , and broker/dealers ed the declines.
Software firms also received a lift after Germany's SAP said its profit rose a stronger-than-forecast 8%, helped by a low tax rate and market share gains. Its shares jumped 7%.
Shares of Juniper Networks Inc. also helped lift the tech sector, jumping almost 12% after Goldman Sachs upgraded the stock to buy from neutral. The broker said Juniper's new routing products should help it regain some of the market share it has lost to Cisco Systems Inc. .
Meanwhile, EBay Inc. fell 1.5% after reporting that its global listings fell 6%, offsetting the 50% profit rise it posted for the second quarter.
Google and Microsoft, both of which report earnings after the close, also drew buying interest to the tech sector.
Financial hit
Financial shares, the most influential sector in the market, slumped for a second consecutive day, as subprime worries reentered the market, with Standard & Poor's downgrading more mortgage-backed securities. The agency on Thursday cut ratings on 418 classes of residential mortgage-backed securities, saying losses would "significantly" exceed its expectations.
Goldman Sachs Group Inc. declined 1.4%; Morgan Stanley nearly 1.4%; and Merrill Lynch & Co. Inc. descended 1%.
And, in a second day of congressional testimony, Federal Reserve Chairman Ben Bernanke added his voice to the mix, predicting "significant losses" from subprime mortgage paper.
Also adding fuel to the subprime fire was a forecast that the economy is due to retract in coming months, in part due to an ongoing slowdown in the housing sector. The Conference Board's Index of Leading Economic Indicators declined 0.3%, a larger drop than anticipated.
On Wednesday, the market ended lower amid jitters over the impact of subprime mortgages and the two now nearly worthlesBear Stearns funds that had invested heavily in them.
Large banks also fell after an analyst downgraded several of them, saying they weren't shielded from the meltdown in the subprime mortgage market.
Financials first received a boost early Thursday, after Bank of America posted a better-than-forecast 5% profit rise. Online broker TD Ameritrade , meanwhile, lifted its earnings guidance for the year.
Oil boost
With investor focus set on earnings, crude oil prices above $75 haven't yet set off any concerns about rising costs for U.S. consumers and businesses. Instead, the energy sector, has lent a helping hand to the market.
On Thursday, Crude oil futures neared $76 a barrel.
"Investors are willing to tolerate higher rates and higher oil prices if the cause is expanding economic growth," said Marc Pado, market strategist at Cantor Fitzgerald. "They are a little less happy if we have to deal with these issues and face an economy still languishing below trend."
Fed's view little changed
Meanwhile, minutes from the Federal Reserve's last meeting on interest rates suggested that some Fed members are more concerned about inflation than Fed Chairman Ben Bernanke.
But the minutes lacked "any reference to FOMC members contemplating scenarios that could lead to future interest rate hikes," said Miller Tabak & Co. fixed-income analyst Tony Crescenzi.
The dollar traded mixed against other major currencies, the euro at $1.317 vs. $1.3795 late Wednesday. The dollar was quoted at 121.99 yen, compared with 121.93 yen.
Gold futures gained more than $4 an ounce and copper rallied almost 3%, sending the benchmark contracts for both metals to their highest closes in more than two months. Gold for August delivery ended $4.40 higher at $678.10 an ounce, while September cooper gained 2.8%, or 9.9 cents, to end at $3.662 a pound.
Treasury prices were little changed, with the 10-year note finishing flat at 95 29/32, its yield climbing to 5.033%.
Earnings
In other earnings news, Continental Airlines said it posted its best profit before tax since 2000.
Motorola Inc. swung to a small loss in the second quarter as sales of mobile phones deteriorated in Asia and Europe.
Elsewhere, PepsiCo fell 1% after a report from The Wall Street Journal that it held merger talks with Nestle that collapsed due to the Swiss food giant's reluctance to pair with a firm that generated the bulk of its sales from potato chips and soda.
By Kate Gibson
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