Dow Jones Industrial Average was up 125 points at 8083
A round of better-than-expected earnings reports pushed stocks higher ahead of the government’s criteria for its stress test, expected at 2 p.m. EDT.
The Dow Jones Industrial Average was up 125 points at 8083, within 50 points of turning positive for the seventh consecutive week, helped by gains in two of its components that posted results late Thursday. Microsoft was up 8.4% despite reporting that its earnings fell 32%, hurt by its first decline in sales as a public company. American Express’s net income fell 56% on an 18% decline in sales. Its shares were up 20%.
Outside the Dow, Ford Motor climbed 17% after it said it lost $1.4 billion in the first quarter but burned through less cash as it continued to restructure without government aid.
Online retailer Amazon.com was up 6.7% after it posted a better-than-expected 24% rise in first-quarter profit, fueled by strong sales of its Kindle device. Amazon’s gains helped spur the technology-oriented Nasdaq Composite Index, which was recently 2.2% higher at 1689, its highest intraday level since Nov. 5, 2008. If it closed for the month here, it would be the strongest two-month gain since October and November 2002, which turned out to be the beginning of the last bull market.
The relative strength of the generally smaller technology and consumer stocks on the Nasdaq represents a growing bet on an economic recovery, traders say.
“This is a breakout and it looks like it has more legs to it,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. For the broader market, “you want technology leadership,” Detrick said. “When you have a true - I don’t want to say bull market yet - but a strong trending market, technology is one thing you want to perform.”
The S&P 500 was up 1.5%, led by gains of more than 3% each in its consumer and materials sectors and came within a point of turning positive for its seventh straight weekly gain.
The financial sector was also gaining by about 1.9%. Treasury Secretary Timothy Geithner is expected to detail the methodology of the “stress tests” regulators have given to the 19 largest U.S. financial institutions. Bank stocks have traded erratically all week as investors await more information on the tests. Thursday, a late bounce in the sector helped drive stock indexes higher in the final half hour of trade.
“The bank stress program is about how much banks have written down the securities that have plagued their balance sheets. It’s the remaining open question and if bank balance sheets continue to be a rat’s nest, we’ll continue to languish,” said Larry Smith, chief investment officer for Third Wave Global Investors.
Shares of major banks were mixed in recent action. The KBW Banks Index rose 1.2%. Bank of America was up 4.4%, Citigroup slipped 0.3%, J.P. Morgan Chase rose 2.2% and Wells Fargo added about 5.3%.
Oil futures rose $1.92, pushing them back above the psychologically important $50 a barrel level. Though new inventory data this week showed U.S. stockpiles of crude at historic highs, traders and analysts say the market is beginning to reflect early bets on summer driving season.
Fadel Gheit, energy analyst at Oppenheimer & Co. in New York, said gasoline demand has held up fairly well this year despite a deep global recession, though other refined fuels, like diesel, have lagged due to weakness in the industrial sector.
“You have to remember that gasoline prices are about half what they were a year ago,” said Gheit. “For the consumer, that helps to offset the effects of job losses,” which tend to weigh on fuel demand.
In another supportive development for oil prices on Thursday, OPEC Secretary General Abdalla Salem El-Badri said he doesn’t expect the oil cartel to cut production when the group meets next month.
In recent action, the dollar was weaker against the yen and euro. The U.S. Dollar Index was off 1%.
In economic news, manufacturers’ orders for long-lasting goods slid 0.8% last month, the Commerce Department said, a smaller-than-expected slide. The department also reported that new home sales dipped 0.6% in March, beating analyst expectations.
Gold futures built on recent gains, up nearly $4 an ounce, as China built reserves, while oil futures were up 30 cents a barrel as OPEC’s secretary-general said compliance with production is running at about 80%. Treasurys were lower, pushing up yields.
Overseas, Tokyo stocks saw a minor fall while those in Hong Kong edged higher. Stocks in Europe rose amid an improving level of business confidence in Germany.
-WSJ
