Stocks rally on strong corporate results

Dow Jones: 11,989.83 (+4.39) S&P 500: 1,299.54 (+2.91) Nasdaq: 2,755.28 (+15.78)STRONG CORPORATE earnings led Wall Street to a 29-month closing high for a second day yesterday, but another run of big gains may be harder to achieve.

The Dow and the S&P struggled to advance past major technical levels – the 12,000 mark for the Dow and 1,300 for the S&P – but investors see more gains for companies that outperform in their earnings.

Microsoft posted a small dip in quarterly profit, but the stock rose as much as 2 per cent after the earnings report, which came earlier than expected.

Microsoft’s stock ended regular trading up 0.3 per cent at $28.87.

Other technology stocks, such as Netflix and Qualcomm, supported the Nasdaq, but poor results from blue chips ATT and Procter Gamble kept the Dow’s advance in check.

“What’s healthy is that companies that come out with good reports are being rewarded and those that are not are getting punished,” said Randall Warren, president at Warren Financial Service in Philadelphia.

The Dow Jones industrial average finished up 4.39 points, or 0.04 per cent, at 11,989.83.

The Standard & Poor’s 500 Index closed up 2.91 points, or 0.22 per cent, at 1,299.54.

The Nasdaq Composite Index was up 15.78 points, or 0.58 per cent, at 2,755.28.

Movie-rental company Netflix soared 15.2 per cent to $210.87 and electronics test equipment maker Teradyne jumped 11.8 per cent to $16.35.

“The market is not viewing everything as being correlated, like it used to before,” Mr Warren said.

Technical analysts also view 12,000 on the Dow as a possible sell trigger as the blue-chip average approaches nine straight weeks of gains.

The S&P has risen 2 per cent since the start of the earnings season.

Qualcomm also helped lift the Nasdaq, rising 5.8 per cent to $54.89 a day after it raised its outlook for second-quarter and full-year revenue.

Caterpillar shares rose 0.9 per cent to $96.63 after the heavy equipment maker reported results.

Thomson Reuters data showed 71 per cent of the SP 500 companies that reported earnings so far have beaten estimates. – (Reuters)